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Dow Jones, Nasdaq, S&P 500 weekly preview: Here comes Q1 earnings season

S&P 500 Futures are trading lower on Monday after a largely uneventful, holiday-abridged trading week, which saw the benchmark U.S. stock market index close 0.1% higher. The last week also saw the thinnest volume recorded in the S&P 500 since December.

The Dow Jones Industrial Average (DJI) ended the week 0.6% higher, recording its fourth consecutive positive weekly close. On the other hand, the Nasdaq Composite Index (IXIC) fell 1.1% after rising 11.5% over the last 3 preview weeks.

Looking forward to this week, investors continue to digest Friday's jobs report, which was mostly in line with the Street's expectations.

The latest inflation data will be released on Wednesday. The consensus sits at +0.4% month-over-month and +5.6% year-over-year for core inflation. The headline inflation is seen rising 0.3% and 5.2% MoM and YoY, respectively.

The FOMC meeting minutes will also be out on Wednesday with investors likely to look for more clues about credit tightening expectations following the banking crisis. As of Friday, the market is currently assigning a ~60% chance the Fed will hike by 25 basis points in May.

Finally, the latest retail sales data is expected on Friday.

Q1 earnings season starts

The S&P 500 first quarter earnings season is set to start later this week. The Street expects earnings to fall 7% YoY, which would mark the largest quarterly decline since Q3 2020. For the last quarter, the S&P 500 earnings fell 1% YoY.

Materials and Health Care are expected to post the biggest earnings decline, followed by Communication Services and Tech. Conversely, Energy and Industrials are seen earnings more than year-ago.

Goldman Sachs analysts expect that deep margin contraction will more than offset modest sales growth, the trend which started in Q3 2022.

"Margins for the aggregate S&P 500 will contract by 146 bp relative to the comparable year-ago quarter, representing the worst quarter of margin contraction since the pandemic. This will more than counteract slight nominal sales growth of 2% in part due to high inflation," the analysts explained.

Goldman expects the S&P 500 will earn $224 in 2023, higher than the bottom-up consensus of $220.

"We expect slightly stronger sales growth and shallower margin contraction. Our forecasts imply that margins will shrink by 50 bp in 2023, while consensus expects more dramatic margin contraction of 90 bp. However, our 2024 EPS estimate of $237 remains below consensus of $247, representing 5% growth yr/yr (vs. 12%)," the analysts added.

JPMorgan and Citigroup are due to report tomorrow with ~87% of the index expected to report by the first week of May.

"In the weeks ahead Q1 earnings season should offer plenty of clues as to the market's direction in this second quarter," said Oppenheimer's strategists on Monday.

What analysts are saying about stocks

Edward Jones analysts: "For long-term investors, there may be opportunities forming in the months ahead, particularly as markets start to look past the economic slowdown toward a recovery period."

Sevens Report analysts: "We think the near-term risk/reward at these levels remains unattractive, and we are maintaining our defensive tactical stance. Moreover, we think slowing growth remains the biggest and clearest trend in markets right now, and we want to insulate portfolios from that impact."

Barclays analysts: "Valuations are too optimistic relative to our base case for a shallow recession and $200 SPX EPS in 2023. However, what if markets stay willing to look through an earnings contraction of this magnitude? Do we ever revisit the lows? Ultimately, we think the bull case for equities, like valuations, is still a stretch."

Oppenheimer analysts: "We remain of the view that we're not "out of the woods" yet but that the "light at the end of the tunnel" appears to be sunlight rather than the head lamp of a locomotive bearing down upon us."

Citi analysts: "We see a disconnect between markets presuming much easier Fed policy on "softer" data and how the Fed will actually see the data. Not only should high inflation and a still-strong labor market keep cuts unlikely, but we see persistently too-strong inflation, including a 0.5% MoM increase in core CPI next week, as leading to further hikes. We maintain our expectation for three 25bp rate hikes at the coming meetings with a policy rate reaching 5.50- 5.75%."

Vital Knowledge analysts: "There are clearly growth headwinds in the US (although perhaps not as strong as some fear, as evidenced by the Fri BLS jobs report) and equity valuations are far from cheap, but we continue to disagree with the prevailing consensus on earnings (companies, especially the big ones in the S&P 500, have tailwinds unique to this period that will help preserve EPS even if/as aggregate demand softens)... We stay more bullish than most."

Stock market today: Dow ends higher as chip stocks climb to offset big tech wobble

The S&P 500 cut losses Monday as a surge in chip stocks helped offset an Apple-infused stumble in big tech and jitters about further Federal Reserve tightening following a strong March jobs report.

The S&P 500 was up 0.1%, the Dow Jones Industrial Average added 0.3%, or 101 points, and the Nasdaq ended flat after falling more than 1% intraday.

Apple personal computer shipments declined by 40.5% in the first quarter, according to market research firm IDC, impacted by weak demand and high inventory.

Apple Inc (NASDAQ:AAPL) fell more than 1%, with Alphabet Inc (NASDAQ:GOOGL) and Microsoft Corporation (NASDAQ:MSFT) also leading to the downside.

Sentiment on tech was also hurt by a rise in Treasury yields on expectations the March nonfarm payrolls report, released on Friday, pointing to a robust jobs market could encourage the Federal Reserve to further tighten monetary policy.

The U.S. economy created 236,000 jobs in March, roughly in line with economist forecasts, the unemployment rate slipped to 3.5%, and wage growth rose to 0.3% for the month as expected.

“Low unemployment coupled with sticky inflation trends could still provide the Federal Reserve with cover to push interest rates higher in the near-term,” RBC said in a note.

A more than 8% surge in Micron Technology Inc (NASDAQ:MU) and Western Digital Corporation (NASDAQ:WDC) helped boost chip stocks, offsetting weakness in the broader tech sector as chip production cuts from rival Samsung (KS:005930) are expected to help restore the supply and demand imbalance in the memory chip sector.

Taiwan Semiconductor Manufacturing (NYSE:TSM), however, fell more than 1% after reporting weaker-than-expected sales in Q1 for the second straight quarter as weaker chip demand continues to weigh.

Tesla (NASDAQ:TSLA), meanwhile, said it plans to build a large new battery facility in Shanghai but also announced price cuts across all four model lines in the U.S., the fifth since the turn of the year, stoking concerns about margin prices for the EV maker.

Energy stocks shrugged off the slip in oil prices as Pioneer Natural Resources (NYSE:PXD) rallied nearly 6% following a Wall Street Journal report that Exxon Mobil (NYSE:XOM) had held informal discussions to acquire the fracking giant.

Financials were slightly higher on the day as some regional banks including First Republic Bank (NYSE:FRC) turned positive ahead of the quarterly earnings season.

JPMorgan Chase (NYSE:JPM), Citigroup Inc (NYSE:C), and Wells Fargo (NYSE:WFC) kick off the quarterly earnings season in earnest on Friday.

Bank earnings will serve as a gauge of stress in the banking sector, particularly for regional banks following the collapse of SVB and Signature Bank.

Stock market today: Dow ends higher as chip stocks climb to offset big tech wobble

Wall Street ends mixed with inflation data, earnings on tap

U.S. stock indexes clawed back from steep losses to a mixed close on Monday as investors digested Friday's employment report and prepared for an eventful week of inflation data and bank earnings.

Megacap momentum stocks dragged the tech-heavy Nasdaq slightly lower, while industrials helped boost the blue-chip Dow into green territory.

The bellwether S&P 500 ended the session nominally higher.

Economically sensitive transports, semiconductors, small-caps and industrials outperformed the broader market, hinting that the economy is sturdy enough to withstand further rate increases from the Federal Reserve.

"It’s a go nowhere day," said Sam Stovall, chief investment strategist of CFRA Research in New York.

"Investors are still convincing themselves that the Fed will raise interest rates by 25 basis points in May which could add to the likelihood of an impending recession. And investor agita is increased ahead of (this week’s) CPI and PPI reports."

The Dow Jones Industrial Average rose 101.23 points, or 0.3%, to 33,586.52, the S&P 500 gained 4.09 points, or 0.10%, to 4,109.11 and the Nasdaq Composite dropped 3.60 points, or 0.03%, to 12,084.36.

Of the 11 major sectors of the S&P 500, six ended the session higher, led by industrials. Communication services and utilities suffered the largest percentage losses.

On Friday, a market holiday, the Labor Department released its March jobs report, which showed robust payrolls growth and a welcome but modest wage inflation cool-down.

While the report signaled the Fed's restrictive policy is beginning to have its intended economic dampening effect, it raised the odds that the central bank will move forward with another 25 basis point increase to the Fed funds target rate at the conclusion of its May policy meeting.

At last glance, financial markets have priced in a 72%likelihood of that happening, according to CME's FedWatch tool.

Recent indicators suggest a softening but sturdy economy, one that can withstand hawkish Fed policy as the central bank works to bring inflation closer to its 2% annual target.

"There’s clearly a disconnect between what the Fed is telling us they’re going to do and what the market believes the Fed is going to do," said Oliver Pursche, senior vice president at Wealthspire Advisors, in New York. "When the Fed repeats time after time what their priorities are and what they’re going to do, they’re going to do it."

Market participants will pay close attention to the consumer (CPI) and producer (PPI) price indexes, expected on Thursday and Friday, respectively, for a more complete picture on the extent to which inflation cooled in March.

On Friday, a trio of big banks - Citigroup Inc (NYSE:C), JPMorgan Chase & Co (NYSE:JPM) and Wells Fargo (NYSE:WFC) & Co - unofficially kick off first-quarter earnings season, and investors will be scrutinizing the reports for clues on the sector's overall health after two U.S. regional banks collapsed in March.

As of Friday, analysts expected aggregate S&P 500 earnings down 5.2% year-on-year, a stark reversal from the 1.4% annual growth expected at the beginning of the quarter, according to Refinitiv.

"Rarely can you injure yourself falling out of a basement window," Stovall added. "Expectations are set so low, the only surprise will be good news."

Shale oil producer Pioneer Natural Resources (NYSE:PXD) Co jumped 5.8% following a report that Exxon Mobil Corp (NYSE:XOM) held preliminary talks with the company about a potential acquisition.

Charles Schwab (NYSE:SCHW) Corp gained 4.8% in the wake of the broker's reported second-highest ever influx of client assets in March.

Chip stocks Micron Technology Inc (NASDAQ:MU) and Western Digital Corp (NASDAQ:WDC) gained 8.0% and 8.2%, respectively, on Samsung Electronics (OTC:SSNLF) Co Ltd's plans to cut chip production.

Advancing issues outnumbered declining ones on the NYSE by a 1.63-to-1 ratio; on Nasdaq, a 1.39-to-1 ratio favored advancers.

The S&P 500 posted 2 new 52-week highs and no new lows; the Nasdaq Composite recorded 50 new highs and 155 new lows.

Volume on U.S. exchanges was 9.09 billion shares, compared with the 12.28 billion average over the last 20 trading days.

Bitcoin clears $30K for first time in 10 months as Fed outlook shifts
Bitcoin rose sharply on Tuesday, clearing the $30,000 level for the first time since June 2022 as markets bet on a less hawkish Federal Reserve in the coming months, while sentiment also improved amid easing fears of a banking crisis.

The world’s largest cryptocurrency rose 6.3% to $30,061.0 by 01:23 ET (05:23 GMT), its highest level in 10 months. The token also largely led gains across its cryptocurrency peers, with Ethereum up 3.3%, while Binance Coin and Ripple added 4.6% and 2.3%, respectively.

Gains in Bitcoin also pushed total crypto market capitalization to $1.4 trillion. Tuesday’s gains put Bitcoin up roughly 80% this year, vastly outperforming most other asset classes.

Bitcoin’s latest rally comes amid a broader improvement in sentiment as markets began pricing in the potential for a limited number of interest rate hikes by the Fed in the coming months, especially as the U.S. economy cools further.

Stock markets also logged a strong rally on Tuesday following this notion. While the Fed is likely to hike interest rates at least one more time, dollar index futures indicate that markets are positioning for an eventual pause, or even reversal in the Fed’s hawkish stance.

A less hawkish Fed bodes well for Bitcoin and other cryptocurrencies, as a sharp rise in interest rates wiped out over two-thirds of total crypto market capitalization through 2022.

Focus this week is on consumer price index inflation data and the minutes of the Fed’s March meeting, for more cues on the path of interest rates.

Bitcoin has been on a tear over the past month, ducking fears of a banking crisis as the token attracted some safe haven plays amid concerns over a broader collapse in the banking system.

But relatively low trading volumes also made for bigger price moves in the token, especially as its tumble through 2022 soured investor sentiment towards cryptocurrencies.

A string of high-profile scandals and bankruptcies also kept investors wary of cryptocurrencies, while U.S. authorities engaged in a regulatory crusade against the space.

Austrian banks unaffected by banking turmoil - finance minister tells NZZ

Austria's government is monitoring the global banking turmoil although there are so far no signs of it spreading to the country's financial sector, Finance Minister Magnus Brunner said in an interview published on Saturday.

"Our banks did their homework very well after the financial crisis. They are very well prepared," Brunner told Swiss newspaper Neue Zuercher Zeitung.

He also defended Raiffeisen Bank International (RBI) which has come under fire for continuing to operate in Russia despite the war in Ukraine.

The Austrian lender is now the most important Western bank in Russia, offering a lifeline to people and businesses there seeking to make international payments, but it is under growing pressure from Western officials and investors to quit.

In February the bank said it had received a request for information from the United States' sanctions authority about its business related to Russia.

Last month RBI said it was considering a sale or possible spin off of the Russian business.

"As for RBI, the bank complies with all international sanctions," Brunner told NZZ. "It is also not subject to sanctions itself," he added.

"Incidentally, there are other European banks that continue to operate legally in Russia. It is crucial for us that all sanctions are observed," he said.

The minister also said Austrian inflation, which fell to an estimated 9.2% in March, was still too high and called on the European Central Bank to do more to contain price increases.

"The European Central Bank (ECB) in particular can do something about this, as a member of the euro zone we are dependent on the ECB," Brunner said.

Dollar rises after US jobs data
The dollar strengthened on Friday after data showed an increase in jobs in the world's largest economy last month, suggesting the Federal Reserve may have to raise interest rates next month.

The dollar index rose by 0.3% to 102.16 after the U.S. non-farm payrolls data. Against the yen, the dollar was up 0.4% at 132.21 yen while the euro was 0.2% weaker at $1.0894.

Wall Street ends higher as investors eye upcoming jobs data
Major U.S. stock indexes ended higher on Thursday, helped by a rally in Alphabet (NASDAQ:GOOGL) shares as investors, worried about a slowing economy, looked to upcoming jobs data.

Alphabet Inc rallied 3.8% and Microsoft (NASDAQ:MSFT) climbed 2.6%, with both providing more fuel than any other stocks for the S&P 500's gain for the session. Alphabet's Google unit plans to add artificial intelligence features to its search engine, the Wall Street Journal reported.

Adding to recent data hinting at a weak labor market, initial jobless claims fell to a seasonally adjusted 228,000 for the week ended April 1, versus expectations of 200,000 claims.

The Labor Department's data from the prior week was revised to show 48,000 more applications were received.

The S&P 500 climbed 0.36% to end the session at 4,105.02 points.

The Nasdaq gained 0.76% to 12,087.96 points, while the Dow Jones Industrial Average rose 0.01% to 33,485.29 points.

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How Does Bitcoin Mining Work? What is Crypto Mining?
What is Bitcoin Mining?
Bitcoin mining is intrinsically essential for creating new digital assets and value transfer on the network. So, what is Bitcoin mining and how does it work?

Bitcoin mining is a process where transactions are validated and then added to the blockchain network by owners of sophisticated mining devices, otherwise known as ‘miners.’ These miners compete against each other by solving complex maths problems to secure the network.

In exchange, the miners are rewarded with newly minted Bitcoins.

Bitcoin miners have to rely on powerful devices due to the difficulty of validating Bitcoin network transactions. Bitcoin uses a proof-of-work (PoW) consensus algorithm, which requires miners to compete to solve complex mathematical puzzles.

To increase efficiency, miners usually join mining pools and utilize specialized rigs to increase their chances of validating transactions and getting the associated reward. The most popular hardware for Bitcoin miners is the application-specific integrated circuit (ASIC), although some miners use the graphics processing unit (GPU).