Can Earnings Break Chip Stock’s Downtrend?
Advanced Micro Devices reports earnings next week, and options traders are bracing for a move.
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Stocks have pulled back as investors brace for more hawkish news from the Federal Reserve today.
The S&P 500 declined 4.2 percent in April, breaking a five-month winning streak that began in November. Selling was widespread across the index, with more than three-quarters of its members losing value. Utilities were the only sectors to rise, while real estate led to the downside.
Fed Chair Jerome Powell said last month that “a lack of further progress” on inflation makes him less willing to cut interest rates. He spoke after March’s consumer price index rose more than expected. A mix of categories drove the increase, including shelter, health care, energy and apparel. Investors worried inflation is getting more entrenched — especially after other readings later in the month seemed to confirm the trend. Borrowing cost rose as a result, and the market priced in fewer interest-rate cuts.
Two other catalysts added to the pain this week. On Monday, the Treasury Department raised its estimate for second quarter bond issuance from $202 billion to $243 billion. Yesterday, the Labor Department’s employment cost index for the first quarter rose more than expected.
The central bank will respond to this backdrop with its monetary-policy statement at 2 p.m. ET today, followed 30 minutes later by Powell’s news conference. Traders are likely to focus on how the Fed talks about inflation, which last meeting it said “remains elevated.” Changes to that wording could impact sentiment. Traders could also monitor details about quantitative tightening, which refers central bank holdings of Treasuries. Less “QT” is potentially dovish.
Top Gainers in the S&P 500 Last Month | ||
General Electric (GE) | +16% | The aerospace company beat estimates and raised full-year guidance. |
Newmont Goldcorp (NEM) | +13% | The gold miner beat earnings and revenue estimates. It’s also looking to sell assets following a rally in metal prices. |
Wabtec (WAB) | +11% | The supplier of train systems beat earnings and revenue estimates. |
Keurig Dr Pepper (KDP) | +9.9% | The beverage company’s earnings and revenue surpassed Wall Street’s forecasts. |
3M (MMM) | +8.8% | The industrial company’s results surprised to the upside. It’s also in the process of spinning off medical supplier Solventum (SOLV). |
Top Decliners in the S&P 500 Last Month | ||
Globe Life (GL) | -35% | The life insurer plunged on comments by a short-selling group. It rejected the claims and announced a stock buyback. |
Intel (INTC) | -31% | Revenue and guidance missed forecasts as the semiconductor maker struggles to update its business and enter the AI market. |
Ulta Beauty (ULTA) | -23% | The cosmetics company’s comparable sales missed estimates and profit guidance was lower than hoped. |
Bio-Rad Laboratories (BIO) | -22% | The life-sciences stock continued a long-term downtrend that began in late 2021. |
CarMax (KMX) | -22% | The auto dealer missed estimates as high interest rates hurt sales. |
Utilities | +1.7% |
Energy | -0.9% |
Consumer Staples | -1.1% |
Industrials | -3.5% |
S&P 500 | -4.2% |
Financials | -4.2% |
Consumer Discretionaries | -4.5% |
Materials | -4.6% |
Communications | -4.7% |
Health Care | -5% |
Technology | -5.7% |
Real Estate | -8.4% |
Below are some key economic events from last month.
Below are some noteworthy commentaries:
Product | Current Month | Expiration | Next Month | 1-Mon% |
S&P 500 E-Mini (@ES) | ESM24 (Jun) | 6/21/24 | ESU24 | -4.7% |
Nasdaq-100 E-Mini (@NQ) | NQM24 (Jun) | 6/21/24 | NQU24 | -5.2% |
Dow Jones E-Mini (@YM) | YMM24 (Jun) | 6/21/24 | YMU24 | -5.5% |
Russell 2000 E-Mini (@RTY) | RTYM24 (Jun) | 6/21/24 | RTYU24 | -7.6% |
Date | Event | What to Watch For |
Wed 5/1 | Fed meeting | Comments on inflation and monetary policy |
Fri 5/3 | Non-farm payrolls | Hiring and wage trends in April |
Wed 5/15 | Consumer price index (CPI) | Inflation trends |
Wed 5/15 | Retail sales | The strength of consumer spending |
Wed 5/22 | Fed minutes | Further guidance on monetary policy |
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