The S&P 500 Index ($SPX) (SPY) Friday closed up +1.02%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.40%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +1.65%. 

US stock indexes rallied Friday, with the S&P 500 posting a 1-1/2 week high and the Nasdaq 100 posting a 1-week high. Blockbuster earnings results from Alphabet and Microsoft boosted the overall market Friday.  Alphabet closed up more than +10% after reporting stronger-than-expected Q1 revenue.  Also, Microsoft closed up more than +2% after reporting Q3 revenue above consensus.  In addition, chip stocks rallied Friday after megacap tech companies this week, including Meta Platforms, Alphabet, and Microsoft said they will continue to boost investment in AI, which should increase demand for companies making AI chips. 

Stock indexes maintained their gains Friday despite US economic news that showed Mar personal spending and the Mar core PCE deflator rose more than expected, hawkish factors for Fed policy.

On the negative side, Intel closed down more than -9% after forecasting weaker-than-expected Q2 revenue. Also, Dexcom closed down more than -9% after forecasting full-year revenue below consensus.

US Mar personal spending rose +0.8% m/m, stronger than expectations of +0.6% m/m.  Mar personal income rose +0.5% m/m, right on expectations.

The US Mar PCE core deflator, the Fed's preferred inflation gauge, rose +2.8% y/y, unchanged from Feb and stronger than expectations of +2.7% y/y.

The University of Michigan US Apr consumer sentiment index was revised downward by -0.7 to 77.2, weaker than expectations of no change at 77.9.  The University of Michigan US Apr 1-year inflation expectations were revised upward to +3.2% from +3.1%.  The Apr 5-10 year inflation expectations were unrevised at 3.0%.

The markets are discounting the chances for a -25 bp rate cut at 3% for the next FOMC meeting on April 30-May 1 and 12% for the following meeting on June 11-12.

Overseas stock markets Friday settled higher.  The Euro Stoxx 50 closed up +1.37%.  China's Shanghai Composite rose to a 1-week high and closed up +1.17%.  Japan's Nikkei Stock Index closed up +0.81%.

Interest Rates

June 10-year T-notes (ZNM24) on Friday closed up +7 ticks.  The 10-year T-note yield fell -3.5 bp to 4.669%.  T-notes prices Friday settled moderately higher as inflation concerns eased after the US Mar PCE core deflator, the Fed's preferred inflation gauge, rose +2.8% y/y, unchanged from Feb.  T-notes also had carryover support from Friday’s gains in European government bonds after the ECB’s Mar 1-year inflation expectations declined.  Gains in T-notes were muted as Friday’s rally in stocks reduced safe-haven demand for T-notes.

European government bond yields Friday moved lower.  The 10-year German bund yield fell -5.5 bp at 2.575%.  The 10-year UK gilt yield fell -3.8 bp at 4.324%.

Eurozone Mar M3 money supply rose +0.9% y/y, stronger than expectations of +0.6% y/y and the fastest pace of increase in 10 months. 

ECB Mar 1-year inflation expectations eased to +3.0% from +3.1% in Feb, the lowest in over two years.  The Mar 3-year inflation expectations were +2.5%, unchanged from Feb and stronger than expectations of +2.4%.

US Stock Movers

Alphabet (GOOGL) closed up more than +10% to lead gainers in the Nasdaq 100 after reporting Q1 revenue ex-TAC of $67.59 billion, stronger than the consensus of $66.07 billion.

ResMed (RMD) closed up more than +18% to lead gainers in the S&P 500 after reporting Q3 adjusted EPS of $2.13, stronger than the consensus of $1.92. 

Nvidia (NVDA) rallied more than +6% to lead chip stocks higher after megacap tech companies this week, including Meta Platforms, Alphabet, and Microsoft, said they will continue to boost investment in AI, which should increase demand for companies making AI chips.  Also, KLA Corp (KLAC) closed up more than +4%, and Broadcom (AVGO) and Marvell Technology (MRVL) closed up more than +3%.  In addition, Advanced Micro Devices (AMD), Micron Technology (MU), Lam Research (LRCX), Applied Materials (AMAT), and ON Semiconductor (ON) closed up more than +2%.   

Microsoft (MSFT) closed up more than +2% after reporting Q3 revenue of $61.86 billion, better than the consensus of $60.87 billion. Other cloud stocks rallied on the news, with Datadog (DDOG) and MongoDB (MDB) closing up more than +4%.  Also, Amazon.com (AMZN) closed up more than +3% to lead gainers in the Dow Jones Industrials.

Skechers USA (SKX) closed up more than +11% after reporting Q1 net sales of $2.25 billion, stronger than the consensus of $2.20 billion. 

Snap Inc (SNAP) closed up more than +28% after reporting Q1 revenue of $1.19 billion, stronger than the consensus of $1.12 billion, and forecasting Q2 revenue of $1.23 billion-$1.26 billion, well above the consensus of $1.21 billion. 

Ball Corp (BALL) closed up more than +6% after reporting Q1 comparable EPS of 68 cents, above the consensus of 55 cents.

Autoliv (ALV) closed up more than +5% after reporting a Q1 adjusted EPS of $1.58, better than the consensus of $1.40. 

Mohawk Industries (MHK) closed up more than +4% after reporting Q1 net sales of $2.70 billion, stronger than the consensus of $2.64 billion.

Intel (INTC) closed down more than -9% to lead losers in the S&P 500 and Dow Jones Industrials after forecasting Q2 revenue of $12.5 billion-$13.5 billion, weaker than the consensus of $13.63 billion.

Atlassian (TEAM) closed down more than -9% to lead losers in the Nasdaq 100 after co-founder Farquhar announced that he is stepping down as CEO after 23 years. 

Dexcom (DXCM) closed down more than -9% to lead losers in the S&P 500 after forecasting full-year revenue of $4.20 billion-$4.35 billion, the midpoint below the consensus of $4.33 billion.

Aon Plc (AON) closed down more than -7% after reporting Q1 adjusted EPS of $5.66, below the consensus of $5.89.

Boyd Gaming (BYD) closed down more than -15% after reporting Q1 adjusted EPS of $1.51, weaker than the consensus of $1.59. 

Fair Isaac (FICO) closed down more than -6% after forecasting full-year revenue of $1.69 billion, below the consensus of $1.70 billion.

Phillips 66 (PSX) closed down more than -3% after reporting Q1 pretax profit of $1.06 billion, below the consensus of $1.24 billion.

Exxon Mobil (XOM) closed down more than -2% after reporting Q1 adjusted EPS of $2.06, weaker than the consensus of $2.19. 

Earnings Reports (4/29/2024)

Arch Capital Group Ltd (ACGL), Domino's Pizza Inc (DPZ), Everest Group Ltd (EG), F5 Inc (FFIV), Franklin Resources Inc (BEN), NXP Semiconductors NV (NXPI), ON Semiconductor Corp (ON), Paramount Global (PARA), Revvity Inc (RVTY), SBA Communications Corp (SBAC), Welltower Inc (WELL).

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