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Briefing.com Summary:
*Apple is shining after its latest earnings report and is underpinning early gains.
*The Q1 blended earnings growth rate has soared to 27.2% from 12.5% three weeks ago.
*Oil prices are sliding, as the market anticipates some breakthroughs toward ending the Strait of Hormuz standoff.
The month of April could not have ended on a much better note. The S&P 500 and Nasdaq Composite extended their reach into record territory, with the former crossing and closing above 7,200 for the first time ever.
Alphabet (GOOG/GOOGL) and the hyperscalers increasing their capex plans provided the thrust for the move, but from our vantage point, it was Caterpillar (CAT) and Eli Lilly (LLY) that created the added lift, demonstrating that the earnings momentum is not just a tech stock story.
Those stocks and others rallied strongly off that understanding, as well as the recognition that the blended Q1 earnings growth rate has blown past expectations, sitting at 27.2% today, according to FactSet, versus 12.5% on April 10.
Over the same time, the forward twelve-month EPS estimate has surged to $343.51 from $333.56.
It is worth repeating today that it is this trend—the earnings trend—that has enabled the stock market to rally the way that it has in the face of rising oil prices and the uncertainty of the Iran War.
Granted, there is a potential earnings headwind looming the longer the Strait of Hormuz remains closed, yet market participants haven't found reason to fear that condition because it hasn't been rattled at all by the earnings guidance narrative to this point. Moreover, the market remains resolute in its belief that the Iran War and the blockade will end without creating long-lasting damage to the global economy.
On a related note, Axios reports that Iran, through Pakistani mediators, delivered to the U.S. on Thursday its response to the latest U.S. amendments on the agreement to end the war. This seems to be becoming a normal pre-weekend exercise.
We digress, but the more important point at this juncture is that oil prices are regressing. WTI crude futures topped $106.00/bbl overnight but are now crossing at $103.52, down 1.5%.
That has put some lift in the equity futures market, along with Apple (AAPL) trading 3.5% higher in pre-market action following its impressive earnings report, outlook, and $100 billion share buyback announcement.
Currently, the S&P 500 futures are up 16 points and are trading 0.3% above fair value, the Nasdaq 100 futures are down 22 points and are trading fractionally below fair value, and the Dow Jones Industrial Average futures are up 141 points and are trading 0.4% above fair value.
Those indications support further gains for the broader market at today's open, which is to say the parabolic action is going to get a bit more parabolic and arguably more enticing to act as a catalyst for taking some money off the table. That pressure has availed itself in the memory space. Sandisk (SNDK) and Western Digital (WDC) are down 4.3% and 7.5%, respectively, after posting blowout quarterly results, signaling some possible exhaustion to their stunning rally efforts.
We'll see soon enough if that permeates the broader tape, but for now, Apple and others, like Twilio (TWLO), Atlassian (TEAM), Reddit (RDDT), Moderna (MRNA), and Estée Lauder (EL), are helping to paint the tape mostly green.
