Quick Read
- Wall Street indices closed the week with gains, led by the Nasdaq’s 1.26% rise.
- U.S.-China trade tensions eased as Beijing exempted some U.S. imports from tariffs.
- Alphabet shares rose 1.7% after strong Google Cloud revenue results.
- Intel stocks dropped 6.7% due to weak revenue and profit forecasts.
- Consumer sentiment remains low despite slight upward revisions.
Wall Street Closes Week with Gains
Wall Street ended the week on a positive note, with all major indices posting gains. The Nasdaq Composite led the charge, rising 1.26%, followed by the S&P 500, which gained 0.74%. The Dow Jones Industrial Average saw a modest increase of 0.05%. These gains were driven by strong earnings reports and easing trade tensions between the United States and China.
Trade Tensions Show Signs of Easing
Investors welcomed signs of de-escalation in the U.S.-China trade dispute, which has weighed heavily on markets in recent weeks. Beijing announced exemptions for certain U.S. imports from its 125% tariffs, a move seen as a goodwill gesture. However, Chinese officials denied claims made by $1 Donald Trump regarding trade negotiations. Treasury Secretary Scott Bessent’s recent statements also hinted at a more conciliatory tone, further calming market nerves.
Strong Earnings Reports Boost Investor Confidence
The first-quarter earnings season is in full swing, with 179 companies in the S&P 500 having reported results. According to LSEG, 73% of these companies have exceeded analyst expectations. Aggregate earnings for the January-to-March period are now projected to grow by 9.7% year-on-year, up from the 8.0% estimate at the start of April.
Alphabet, the parent company of Google, saw its shares rise by 1.7% after reporting a 28% increase in Google Cloud revenue. The company also reassured investors about the profitability of its artificial intelligence (AI) investments. On the other hand, Intel’s stock fell 6.7% following weak revenue and profit forecasts, highlighting ongoing challenges in the semiconductor industry.
Sector Performance and Market Breadth
Among the S&P 500’s 11 major sectors, consumer discretionary and technology led the gains, while materials posted the largest losses. Charter Communications was a standout performer, with its stock surging 11.4% after the company exceeded revenue estimates and added more subscribers than expected. In contrast, oilfield services provider SLB saw a 1.2% decline after missing profit estimates and warning of potential industry-wide challenges.
Market breadth was positive, with advancing issues outnumbering decliners by a ratio of 1.33-to-1 on the New York Stock Exchange (NYSE). On the Nasdaq, the ratio was 1.14-to-1. However, trading volume on U.S. exchanges was below average, totaling 14.30 billion shares compared to the 19.13 billion average for the last 20 trading days.
Consumer Sentiment Remains Weak
The University of Michigan’s final reading on April consumer sentiment showed a slight upward revision but remained at its lowest level since July 2022. The overall index stood at 52.2, with current economic conditions at 59.8 and future expectations at 47.3. Inflation expectations also remained elevated, reflecting ongoing concerns about economic stability and consumer spending.
As the earnings season progresses, investors will continue to focus on forward guidance from companies, particularly in light of economic uncertainties and shifting consumer behavior. The easing of U.S.-China trade tensions, if sustained, could provide additional support to the markets. However, challenges such as inflation and geopolitical risks remain key factors to watch in the coming weeks.
Overall, Wall Street’s performance this week underscores the resilience of the markets amid a complex economic landscape. With strong earnings and improving trade relations, investors have reasons to remain cautiously optimistic.