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The stock market showed some impressive resilience yesterday, rebounding from sharp losses on month-end buying activity, optimism that the Fed could soon be motivated to cut the target range for the fed funds rate, and rumblings from Chinese state media that the U.S. has approached China to try to work out a trade deal.
The S&P 500, down 2.3% at its low, ended the session up 0.2%, while the Nasdaq Composite, down 2.9% at its low, managed to fight its way back to a negligible 0.1% loss.
That resilience, combined with some impressive earnings results and guidance from Microsoft (MSFT) and Meta Platforms (META), has helped drive some follow-through buying interest this morning.
Currently, the S&P 500 futures are up 53 points and are trading 0.8% above fair value, the Nasdaq 100 futures are up 301 points and are trading 1.5% above fair value, and the Dow Jones Industrial Average futures are up 200 points and are trading 0.4% above fair value.
Microsoft, which is up 9%, and Meta, which is up 7%, are the key drivers here, helping to offset a 5.9% decline in Qualcomm (QCOM) after its earnings report and acknowledgment that the uncertainty around the impact of global trade is impacting demand across the company's businesses; a 5.1% decline in Eli Lilly (LLY), which lowered its full-year earnings outlook; and a 2.0% drop in McDonald's (MCD), which topped earnings estimates but posted its biggest same-store sales decline (-3.6%) since 2020.
That grouping is just scraping the tip of the iceberg of earnings reports since yesterday's close, which also included results from CVS Health (CVS), KLA-Tencor (KLAC), Harley-Davidson (HOG), Hershey (HSY), Moderna (MRNA), Biogen (BIIB), Hyatt (H), and Baxter (BAX) to name a few other luminaries.
Like yesterday, there are too many reports to cover here, so be sure to visit Briefing.com's Earnings Results and Earnings Guidance Calendars for the full rundown.
You will also want to consult Briefing.com's Economic Calendar, which will soon be filled with data for the final April S&P Global U.S. Manufacturing PMI (prior 50.2) at 9:45 a.m. ET, March Construction Spending (Briefing.com consensus 0.3%; prior 0.7%) at 10:00 a.m. ET, and the April ISM Manufacturing Index (Briefing.com consensus 47.9%; prior 49.0%) at 10:00 a.m. ET.
It is already populated with data for the latest initial and continuing jobless claims report, which was released at 8:30 a.m. ET.
Briefly, initial jobless claims for the week ending April 26 increased by 18,000 to 241,000 (Briefing.com consensus 225,000), driven by a surprisingly large (and unexplained) jump in claims in New York, while continuing jobless claims for the week ending April 19 increased by 83,000 to 1.916 million, which is the highest level since November 13, 2021.
The key takeaway from the report is that the relatively large jump in both initial and continuing jobless claims will stoke concerns about a softening labor market, which in turn might elevate the market's thinking that the Fed can be convinced that it needs to be less restrictive with its policy stance.
Initial jobless claims are a leading indicator, and they continue to run comfortably below levels typically seen in a recession; nonetheless, participants (and the Fed) will be closely attuned to the claims trend in coming weeks as an important marker for policy decisions.
As a reminder, the April Employment Situation Report will be released at 8:30 a.m. ET on Friday.
The 2-yr note yield is down four basis points to 3.58%, and the 10-yr note yield is down three basis points to 4.15%.
