NASDAQ 100, Dow Jones, S&P 500: Investors Await CPI Data, Earnings Season; Meta Climbs

Highlights

• US stock indexes display mixed performance after previous week’s losses.
• Investors eagerly anticipate inflation data and the start of the second-quarter earnings season.
• Market sentiment influenced by concerns over interest rate hikes and expectations for earnings.

Overview

The major US stock indexes are putting in a mixed performance on Monday as investors sought to rebound from a week of losses. Anticipation grew as market participants geared up for a series of upcoming inflation data releases and the commencement of the second-quarter earnings season.

At 14:30 GMT, the blue chip Dow is trading 33881.15, up 146.27 or +0.43%. The benchmark S&P 500 Index is at 4402.54, up 3.59 or +0.08% and the tech-heavy Nasdaq Composite is trading 13655.33, down 5.39 or -0.04%.

Inflation Data Sparks Market Anticipation

This week, market observers will closely watch the consumer price index report, scheduled for Wednesday, followed by the release of the producer price index on Thursday, which measures wholesale price pressures. Last week’s strong jobs report heightened concerns over the potential for additional interest rate hikes by the Federal Reserve, making this week’s inflation data all the more critical. Should the inflation report come in lighter than expected, it could potentially ignite a market rally.

Market Sentiment Shifts Amid Optimism

Investors’ sentiment was influenced by the belief that an opportune moment was presenting itself. The previous week saw a market sell-off due to the robust jobs report, resulting in a surge in yields. This development triggered fears of an extended period of higher interest rates. Consequently, investors approached the current week with a somewhat bearish outlook. However, there is optimism that the core consumer price index (CPI) could potentially surpass expectations, coming in at 0.2% or higher.

Goldman Sachs: Positive Outlook for Q2 Earnings

Goldman Sachs believes that corporate America is well-positioned to exceed low expectations during the second-quarter earnings season. Consensus forecasts anticipate a 9% year-on-year decline in S&P 500 earnings per share (EPS) driven by stagnant sales growth and margin compression. However, Goldman Sachs expects companies to meet these low projections. Additionally, there are indications that negative EPS revisions for 2023 and 2024 may have reached their bottom, and sentiment towards revisions has improved.

Key Earnings Reports Awaited This Week

This week will see notable earnings reports from PepsiCo and Delta Air Lines on Thursday, followed by JPMorgan and Citigroup on Friday. The earnings season will be initiated by financial giants BlackRock, JPMorgan Chase, Wells Fargo, and Citigroup, whose reports will be closely watched by investors. On Monday, Citigroup and JPMorgan shares experienced slight gains of around 1%, while Wells Fargo saw marginal upward movement.

Meta Platforms Surprises with 1% Gain

Before the market opening, several stocks were already making moves. Advance Auto Parts’ stock dipped 3% in premarket trading following a downgrade by Atlantic Equities to underweight. Similarly, Icahn Enterprises saw a 14% increase after Carl Icahn severed personal loans from the stock price in response to recent attacks by a short seller. Meanwhile, Meta Platforms, the parent company of Facebook, enjoyed a 1% gain in premarket trading, propelled by the success of its new online platform, Threads, which has already attracted over 100 million users since its launch last week.

Outlook:  Mixed Performance on Low Volume

Overall, the US stock market is navigating a mixed trading landscape, with investors eagerly awaiting the inflation data and anticipating how companies will fare during the second-quarter earnings season.