US equities advance following earliest batch of corporate earnings

Monday’s trading session saw an increase in US stocks as another round of crucial earnings started. Following the fall of Silicon Valley Bank last month, investors are still paying close attention to financial institutions’ earnings.

The technology-heavy Nasdaq Composite (IXIC), the S&P 500 (GSPC), and the Dow Jones Industrial Average (DJI) all increased at the close.

Bond yields increased. On Monday, the yield on the 10-year note increased to 3.597% while the yield on the two-year note increased to 4.188%.

After the closure on Monday, First Bank, Pinnacle Financial Partners, Inc., ServisFirst Bancshares, Inc. (SFBS), and CrossFirst Bankshares, Inc. are scheduled to report, offering additional information about the banking industry.

With a large number of bank profits expected this week, the earnings season will gain momentum. First Horizon (FHN), Western Alliance (WAL), United Airlines (UAL), and Netflix (NFLX) are set to report after the market closes on Tuesday. Bank of America (BAC), Goldman Sachs (GS), and Bank of New York Mellon (BK) will report before the bell.

In terms of the economy, the general business conditions indicator from the NY Fed Empire State Manufacturing Survey increased from a dismal score of 24.6 in March to 10.8 in April. The reading was better than the analysts’ predicted value of 18.0.

The National Association of Home Builders reports that as housing data takes centre stage, confidence among US single-family homebuilders grew in April, the fourth consecutive month this metric has increased, as decreasing mortgage rates and low inventory support demand for new houses.

The following week’s scheduled releases include information on housing starts, existing home sales, mortgage rates, and application volumes. Investors will be able to get a clearer picture of the housing market from the data in light of the small easing of interest rates.

Data on PMI and unemployment are expected, and both could shed light on how the Fed will act before its upcoming blackout period, which begins on Saturday.

Separately, US Treasury Secretary Janet Yellen stated in an interview that lending restrictions in response to recent bank failures may take the place of any rate increases. Market strategists are watching to see if all eight Fed officials who are scheduled to speak this week would concur.

Traders are making bets that the gloom and doom may have passed – for the time being. Wall Street’s “fear gauge,” the CBOE Volatility Index, or VIX, recorded its lowest close on Friday in more than a year. Following the banking turmoil, traders are currently more concerned with earnings than systemic problems.

Nevertheless, according to statistics from the CME Group, markets have already factored in an 86% chance that the Federal Reserve will increase interest rates by another 0.25% in May.

Alphabet Inc.: Shares fell on Monday morning on news that Samsung Electronics was considering switching the default search engine on its devices from Google to Microsoft-owned Bing.

Roblox Corporation: The business released some data for March that suggested that the average reservations per daily active user may have decreased.

Shares of XPeng Inc., a Chinese manufacturer of electric vehicles, increased after the business disclosed a new technology platform that will reduce expenses.

Moderna, Inc. (MRNA): The stock dropped after findings for its cancer vaccine developed in collaboration with Merck indicated “a longish and complex path” for approval.

State Street Corporation (STT): After announcing a quarterly earnings miss due to a decline in fee income amid the recent banking instability, shares fell more than 9%.

Charles Schwab Corporation (SCHW): According to the company’s most recent earnings, the first three months of 2023 saw a $41 billion loss in deposits.