Marketbites: Busy Corporate Earnings Week
Portfolio Manager Commentary:
The S&P 500 rose Monday as traders read through the latest batch of corporate earnings results for insight into the health of corporate America. Earnings season pressed on yesterday with results from State Street and Charles Schwab before the bell. Schwab shares, which have come under pressure amid fears that the brokerage firm may suffer a similar fate to Silicon Valley Bank, rose 3.9% on a profit beat despite a decline in deposits. State Street fell 9.2% after missing estimates on the top and bottom lines. Wall Street is closely monitoring the health of financial names this earnings period after Silicon Valley Bank’s collapse last month spurred a liquidity crisis and rocked the broader sector.
Elsewhere, the S&P’s communication services sector slumped 1.3%, led to the downside by declines from tech giants Alphabet, Netflix, and Meta Platforms. The Google parent company fell more than 2% as The New York Times reported that Samsung is weighing making Bing its default search engine.
Corporate earnings got off to a positive start last week as banking giants Wells Fargo and JPMorgan Chase beat expectations. The findings seemed to suggest that behemoths are holding up against mounting recession fears. As companies grapple with inflation and higher rates, many investors have braced for a downbeat earnings season, but data from Bank of America suggests that companies so far are hanging on. Of the companies that reported last week, 90% topped EPS estimates. That’s the best beat rate to start earnings season since at least 2012, the bank said.
Chart of the Day:
The economy is proving more resilient and inflation more stubborn than economists expected a few months ago, and as a result the Federal Reserve will keep interest rates high for longer, according to The Wall Street Journal’s latest survey of economists. On average, economists expect inflation to end this year at 3.53%, up from 3.1% in the January survey. Inflation in March was 5%, the Labor Department reported this past week, the lowest in two years.
What else is happening:
Air guardsman is charged over leaked documents - read here
Evan Gershkovich's family speaks out for the first time since his arrest - read here
Americans pull back on big-ticket purchases - read here
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