Market Overview
Today's trading session was marked by volatility across major indexes. The S&P 500 experienced a slight decrease of 0.2%, while the Nasdaq Composite saw a marginal decline of 0.1%. Contrarily, the Dow Jones Industrial Average managed a modest increase of 0.2%, buoyed by a significant rise in UnitedHealth (UNH, Financial), which surged 5.2% following its earnings announcement.
Federal Reserve Commentary
The market's afternoon fluctuations were largely in response to comments from Federal Reserve Chair Powell. Despite not presenting any major surprises, his remarks were interpreted as a confirmation of recent adjustments to interest rates. Powell emphasized the need for more time to assess the impact of restrictive policies, especially in light of the ongoing challenges with inflation.
Treasury Market and Economic Data
Yields in the Treasury market saw an uptick, with the 2-year note yield rising by two basis points to 4.96% and the 10-year note yield increasing by three basis points to 4.66%. This rise in yields came despite a disappointing report on Housing Starts and Building Permits for March, signaling a continued negative sentiment in the market.
Earnings and Market Sentiment
Negative earnings news, notably from Bank of America (BAC, Financial), which fell 3.5%, further contributed to the market's downward bias. This sentiment was reflected in the broader market as decliners led advancers by nearly 2-to-1 on both the NYSE and Nasdaq. The SPDR S&P Bank ETF (KBE, Financial) also declined by 1.3%.
Economic Indicators and Performance
- The S&P 500 is up 5.9% year-to-date (YTD).
- The Nasdaq Composite has increased by 5.7% YTD.
- S&P Midcap 400 has grown by 2.6% YTD.
- The Dow Jones Industrial Average has a modest gain of 0.3% YTD.
- The Russell 2000 is down by 2.9% YTD.
Housing and Industrial Production Reports
The March Housing Starts and Building Permits report offered no relief for the supply-constrained housing market, with significant declines in single-unit starts across most regions. On a brighter note, March's Industrial Production report showed continued growth, driven by manufacturing output, indicative of a growing economy.
Looking Ahead
Key economic data and reports scheduled for release include the Weekly MBA Mortgage Index, Weekly Crude Oil Inventories, the April Beige Book, and February's Net Long-Term TIC Flows. Additionally, international markets will be closely monitored, with notable movements in Europe and Asia's major indexes and commodities prices.
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Today's News
Berkshire Hathaway (BRK.B) marked its seventh consecutive session of decline, closing 0.89% lower at $396.69. Over the last six trading days, the stock has shed 4.47% of its value, underperforming the broader Financial Select Sector SPDR Fund ETF, which lost 4.17% in the same period. Despite the recent downturn, Berkshire Hathaway is anticipated to report a Q1 earnings increase, with a consensus EPS estimate of $4.65, reflecting a 26.03% year-over-year growth, and a consensus revenue estimate indicating a 6.30% decline from the previous year.
A trio of media giants, Disney (DIS, Financial), Warner Bros. Discovery (WBD, Financial), and Fox (FOX, FOXA), are facing scrutiny over their planned sports streaming bundle. Lawmakers have raised concerns about the potential competitive effects of their services' bundling, reflecting the significant influence these companies hold in the programming market.
United Airlines Holdings (UAL, Financial) experienced a rise in postmarket action after unveiling strong underlying results for Q1. Despite a $200 million impact from the Boeing 737 MAX 9 grounding, the airline highlighted a 10.1% year-over-year passenger revenue growth, driven by significant gains in the Pacific and Europe segments.
Webull Financial is under investigation by multiple states over concerns that the Chinese-owned trading platform may have exposed U.S. clients' personal and financial information to the Chinese Communist Party. This inquiry adds to the growing concerns over data privacy and security on financial platforms.
Autodesk (ADSK, Financial) provided an update on its internal investigation regarding the company's free cash flow and non-GAAP operating margin practices. Despite the ongoing investigation, Autodesk believes that none of the matters under review affect its previously issued financial statements.
Super Micro Computer (SMCI, Financial) received a notable price target increase from Loop Capital, highlighting the company's potential in the artificial intelligence server industry. This adjustment reflects growing confidence in Super Micro's long-term growth prospects.
President Joe Biden's upcoming visit to the United Steelworkers headquarters is expected to touch upon Nippon Steel's (NISTF, Financial) planned purchase of US Steel (X, Financial), with Biden reiterating his commitment to American workers amid discussions on keeping US Steel under American ownership.
Several REITs, including InvenTrust Properties (IVT, Financial) and CareTrust REIT (CTRE, Financial), announced dividend hikes in March, signaling confidence in their financial health and future growth prospects.
Rivian Automotive (RIVN, Financial) traded at an all-time low despite pushing forward with its growth plans, including software updates aimed at enhancing the user experience for its electric vehicles.
Omnicom Group (OMC, Financial) and Interactive Brokers Group (IBKR, Financial) both reported earnings that surpassed expectations, reflecting their strong financial performance amidst challenging market conditions.
A contrarian sell signal is emerging as money managers display the highest level of bullishness in more than two years, raising concerns about the potential for a market correction.
Barrick Gold (GOLD, Financial) reported lower than expected preliminary gold production for Q1, attributing the decline to maintenance activities at its Nevada Gold Mines, though it remains on track to meet its full-year guidance.
Ontrak (OTRK, Financial) and J.B. Hunt Transport Services (JBHT, Financial) shared their latest financial results, with Ontrak missing revenue and EPS estimates for Q4 and J.B. Hunt reporting a decrease in revenue and operating income for Q1.
GE Vernova (GEV, Financial) received a favorable Buy rating from Goldman Sachs, highlighting the company's significant potential in the electrification and decarbonization sectors.
Kinder Morgan (KMI, Financial) is poised to announce its Q1 earnings, with analysts anticipating a 13.3% year-over-year increase in EPS and a 12.1% increase in revenue, despite facing challenges from weakened natural gas prices and higher interest expenses in the previous quarter.
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