Before The Bell
The U.S. stock market made notable progress yesterday, as we kicked off a new week on Wall Street. Looking to today’s action, overnight the markets offshore were mixed in Asia. However, stocks in Europe have been trading higher, with solid gains on the U.K.’s FTSE 100 index. On our shores, the S&P 500 futures are pointing to a nicely higher opening.
Meanwhile, Wall Street continues to digest the daily coronavirus news. Many investors are looking for the number of hospitalizations and deaths to decrease. Also, the availability of testing and the emergence of potential treatments are of key importance. Further, some parts of the nation are starting to ease restrictions and reopen businesses, and Wall Street has taken notice.
Further, traders may be carefully following this week’s economic reports. This morning, the April consumer confidence numbers are due to be released. Expectations call for a drop in this key sentiment measure. Tomorrow, we will get a look at the advanced first-quarter GDP number. A contraction is widely expected. Also in the afternoon, the FOMC will wrap up its two-day meeting, providing an interest-rate decision and some commentary. With rates already quite low, investors will be looking at the other tools the central bank has in its arsenal.
In the corporate arena, the first-quarter earnings season is in full swing. About 25% of the companies reporting have already weighed in with their results. Not surprising, many have suspended guidance or have tempered their view for the full year 2020, due to limited visibility. By now, most traders fully expect that this year will be unproductive for corporate profits. However, for most businesses, the ability to conserve funds and manage balance sheets will be of key importance. This morning brings reports from PepsiCo (PEP), Caterpillar (CAT), and 3M (MMM). After the close, Google’s parent company Alphabet (GOOG), Starbucks (SBUX), and Advanced Micro Devices (AMD) deliver their numbers.
Technically, the month of April has been shaping up nicely. Recently, the broader S&P 500 Index closed above its 50-day moving average (just under the 2,800 level). According to technicians this development can be regarded as a bullish signal. From a sector perspective, we have seen some leadership in the healthcare names, the basic materials issues, and the technology stocks. Looking ahead, it would be constructive to see the consumer names, and the retailers, in particular, firm up. In addition, a recovery in the financial stocks would also suggest a greater degree of confidence.
– Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
