Stocks closed near session highs Monday, as the S&P 500 (^GSPC) notched its best three-day run in a rip-roaring 2024. Wall Street continued to build on an end-of-week surge precipitated by a softer-than-expected jobs report that helped spur bets toward an earlier rate cut from the Federal Reserve.
The S&P 500 gained 1%, while the tech-heavy Nasdaq Composite (^IXIC) rose 1.2%. The Dow Jones Industrial Average (^DJI) increased almost 0.5%.
Stocks extended their rally from the end of last week, getting a boost from a "Goldilocks" jobs report that struck the balance in providing welcome news for both the markets and the Fed. More than two-thirds of bets are now on a September rate cut from the Fed, according to the CME FedWatch Tool. Most traders now expect at least two cuts by the end of the year.
Those bets could be swung by the return of Fedspeak, now that free-speaking Fed officials are untethered from a pre-meeting blackout period.
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On Monday, New York Fed president John Williams said officials will make rate cut decisions based on the totality of incoming data. Williams assured eventually "we'll have rate cuts," but for now monetary policy is in "a very good place."
Also on Monday, Federal Reserve Bank of Richmond president Thomas Barkin expressed optimism that inflation will come down to 2% as "the full impact of higher rates is yet to come."
Minneapolis's Neel Kashkari is set to speak on Tuesday.
In corporate news, Disney (DIS) will take center stage this week as earnings season starts to wind down. Its stock is up more than 25% so far this year.
After a 6% post-earnings rally on Friday, Apple (AAPL) shares lost around 0.9% after Berkshire Hathaway CEO Warren Buffett revealed over the weekend the company had pared its holdings in the iPhone maker.
Boeing (BA) sank more than 1% in afternoon trading after the the Federal Aviation Administration said it has launched a new probe into the aircraft maker's 787 Dreamliner after the company revealed to regulators last month it may not have completed the required inspections.
A Boeing spokesperson told Yahoo Finance, "we promptly notified the FAA and this is not an immediate safety of flight issue for the in-service fleet."
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Ines Ferré
S&P 500 notches biggest 3-day rally gain of the year
Stocks gained to close around session highs Monday as the S&P 500 (^GSPC) notched its biggest three-day rally gain of the year amid expectations of Fed rate cuts in 2024.
The S&P 500 gained 1% while the tech-heavy Nasdaq Composite (^IXIC) rose 1.2%. The Dow Jones Industrial Average (^DJI) increased almost 0.5%.
On Monday Richmond Fed president Tom Barkin said the current level of interest rates would be enough to eventually bring inflation down to the central bank's target of 2%.
Meanwhile, Federal Reserve Bank of New York president John Williams said a rate cut decision will be made on the totality of economic data but for now, monetary policy is in a "very good place."
Some of the biggest gainers on the Nasdaq 100 (^NDX) included Micron (MU) and Nvidia (NVDA), both up more than 3.5%.
Boeing (BA) shares sank as the the Federal Aviation Administration (FAA) said it had launched a new probe into the aircraft maker's 787 Dreamliner after the company revealed to regulators last month it may not have completed required inspections.
A Boeing spokesperson told Yahoo Finance, "We promptly notified the FAA and this is not an immediate safety of flight issue for the in-service fleet."
All eyes are on Disney (DIS), set to report quarterly results on Tuesday before the opening bell.
Alexandra Canal
Disney earnings preview: set to report first earnings report since Nelson Peltz proxy battle win
Disney (DIS) will report its fiscal second quarter earnings before the bell on Tuesday — its first earnings report since the media giant successfully fended off a high-profile proxy fight with activist investor Nelson Peltz.
As a reminder, Disney recently adjusted its reporting structure after CEO Bob Iger reorganized the company into three core business segments: Disney Entertainment, which includes its entire media and streaming portfolio; Experiences, which encompasses the parks business; and Sports, which includes ESPN networks and ESPN+.
Over the past year, Disney has been grappling with challenges that include a declining linear TV business, slower growth in its parks business, and profitability hurdles in streaming. But a recent turnaround plan from CEO Bob Iger has investors more bullish in recent months.
Here's how Wall Street expects Disney to perform, according to consensus estimates compiled by Bloomberg:
Total revenue: $22.10 billion versus $21.82 in Q2 2023
Adj. earnings per share: $1.10 versus $0.93 in Q2 2023
Entertainment revenue: $10.31 billion
Sports revenue: $4.33 billion
Experiences revenue: $8.18 billion
Disney+ subscribers: 4.71 million versus a loss of 4 million subscribers in Q2 2023
Disney's stock has been on a tear since the start of the year, up about 30% compared to the S&P 500's (^GSPC) 10% rise over that same time period.
The bullish sentiment has been driven by improved financials along with a slew of fresh announcements the company revealed in February — just ahead of its proxy fight win.
"I don't know that [Disney has] a lot left in its pocket for this earnings report," Doug Creutz, managing director at TD Cowen, told Yahoo Finance. "I think numbers will be fine, but I don't think you'll see nearly as much 'new news' as we did three months ago."
A quiet economic data week is usually a good thing for stocks
After several weeks of inflation and Federal Reserve interest rate cuts driving the market narrative, it's all quiet on the economic news front.
There are no notable economic data releases set for this week.
And research from Bank of America shows that's usually a good thing for stocks. Since 2014, the S&P 500 (^GSPC) has risen 0.6% during weeks with no key macro data releases. The median gain in other weeks is 0.2%, per BofA.
Josh Schafer
Companies are having their best earnings season in nearly 2 years
With 80% of the companies in the S&P 500 (^GSPC) done reporting, the benchmark index is pacing for 5% growth in first quarter earnings per share, per FactSet. This is the biggest year-over-year increase since the second quarter of 2022 and higher than the 3.2% growth analysts had expected prior to the start of the season.
"Higher interest rates usually hurt U.S. stock valuations," Jean Boivin, the head of the BlackRock Investment Institute, wrote in a weekly note on Monday. "Instead, strong Q1 earnings have supported stocks even as high rates and lofty expectations raise the bar for what can keep markets sanguine."
Perhaps the most notable move on the earnings front in the past month has come in second quarter outlooks. Thus far, 55% of the companies that have reported have given lower EPS guidance than analysts expected for the current quarter, well below the 10-year average of 63%, per FactSet.
This comes as analysts have remained surprisingly optimistic on the current quarter. Typically, analysts cut earnings forecasts as the quarter rolls on. That hasn't happened yet.
Through the first month of the second quarter, analysts have raised their earnings per share projections for companies in the S&P 500 by an aggregate of 0.7%. This compares to a usual decline of 1.8% over the past 20 years.
DataTrek co-founders Jessica Rabe and Nicholas Colas described this as a "bullish development."
"Even with all the uncertainty around monetary policy, it is hard to see US large caps falling very much when estimate revisions are positive," the DataTrek team wrote. "The bear case for stocks needs an exogenous shock to come along, and quickly."
Richmond Fed president Tom Barkin said Monday he is optimistic that the current interest rates will be enough to eventually bring inflation down, and that the Fed can afford to be patient due to a strong job market.
"The recent data whiplash has only confirmed the value of the Fed being deliberate," Barkin said in a speech at Columbia Rotary Club in South Carolina.
"The economy is moving toward better balance, but no one wants inflation to reemerge."
Barkin’s comments come after inflation showed a lack of progress in the first three months of the year after a steady decline in the second half of last year.
Boeing countdown to Starliner first crewed mission to ISS
Boeing (BA) stock was up more than 1% ahead of the industrial giant's first planned astronaut launch to NASA's International Space Station on Monday night at 10:34 p.m. Eastern.
If the flight proves successful, it could pave the way for NASA to allow Boeing to conduct routine flights to and from the ISS for the agency. Boeing's Starliner program has faced a series of setbacks and delays over the years. The Starliner space capsule failed to reach the ISS in 2019.
Palantir stock rose more than 6% Monday morning to occupy the No. 1 slot on Yahoo Finance's trending ticker page with the software developer's first quarter earnings results due out after the market close. Analysts will be paying close attention to the company's performance in its artificial intelligence platform (AIP) segment.
Shares of Tyson Foods fell Monday despite reporting better-than-expected earnings for the second quarter. While the company beat revenue estimates, it missed on net sales due to a consumer spending slowdown and issues stemming from the company's chicken production operations.
Disney is set to deliver its quarterly results on Tuesday prior to the market open. The print will be the first results released since the media conglomerate won its proxy fight with Nelson Peltz last month. Investors will be watching for subscriber growth in streaming services, parks attendance, and Disney's read on the summer box office.
Ines Ferré
Robinhood gets new legal threat from SEC as crypto crackdown continues
Robinhood (HOOD) said it received a Securities and Exchange Commission warning that the trading platform could face an enforcement action related to its US crypto business.
The so-called Wells notice that Robinhood received May 4 stated that the SEC’s staff made a "preliminary determination" to recommend the action due to violations of registrations as a securities broker and transfer agent.
Its stock, however, rose more than 1% in early morning trading Monday after dropping by as much as 7% before the market open.
Robinhood warned in its disclosure that a potential action from the SEC could mean a civil complaint and a public court proceeding that could end in a fine, a cease-and-desist order, and other limitations on its crypto activities.
The SEC has gone after a number of firms that let US customers trade cryptocurrencies as part of a wide-ranging crackdown on the industry. Read more here.
Ines Ferré
Energy stocks lead gains as oil edges higher
Energy-related stocks gained Monday as oil inched higher. The S&P 500 Energy Sector Select ETF (XLE) rose more than 1%, leading the overall market gains.
Crude futures rose on renewed geopolitical tensions and after Saudi Aramco increased its prices for Asian customers, signaling tight supply.
West Texas Intermediate (CL=F) rose less than 1% to hover above $78 per barrel. Brent, the international benchmark price, also gained (BZ=F) to trade above $83 per barrel.
Last week, oil fell more than 6% amid diplomatic efforts for a ceasefire between Hamas and Israel. By Monday, that prospect had dimmed.
"I believe we have seen some major liquidation in the crude space from hedge funds and therefore, more buying power could be on the sidelines if we get renewed Geopolitical fears," Dennis Kissler, senior vice president at BOK Financial, said in a note to clients on Monday.
Ines Ferré
Stocks edge higher on hopes of Fed rate cuts this year
Stocks opened higher on Monday as Wall Street looked set to continue the market's surge on Friday on bets the Federal Reserve will cut rates this year amid a softening job market.
The S&P 500 (^GSPC) gained 0.4%, while the tech-heavy Nasdaq Composite (^IXIC) rose 0.3%. The Dow Jones Industrial Average (^DJI) rose more than 0.4%.
In corporate news, Disney (DIS) will report quarterly results this week, as earnings season starts to wind down.
Apple (AAPL) shares opened slightly lower Monday after Berkshire Hathaway CEO Warren Buffett revealed over the weekend the company had pared its holdings in the iPhone maker. Apple stock gained more than 6% on Friday in reaction to the company's quarterly results and historic share buyback announcement.
RobinHood (HOOD) revealed it received a "Wells Notice" from the Securities and Exchange Commission (SEC) informing the trading platform of potential securities violations related to crypto trading.
Brett LoGiurato
Monday's quick earnings primer
Via the Yahoo Finance Morning Brief newsletter (sign up here), here's a quick glance at the biggest companies reporting earnings today:
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