Stocks accelerated declines ahead of rate decision tomorrow and regional bank worries. Anxious investors are still not convinced that the ongoing regional banking crisis is over because higher rates are likely to inflict more pains on the banking industry.
JP Morgan Chase agreed to acquire all deposits and substantial assets of the failed First Republic Bank over the weekend in a competitive bidding process.
The latest inflation index reading raised hopes that the Federal Reserve may not have to lift rates significantly above 5% and manage soft landing with little harm to the jobs market. Market rally broadened beyond tech stocks and major averages extended weekly gains.
Core rate of inflation remained elevated and significantly above the Fed's target rate of 2% in March. Intel reported the largest quarterly loss in its history. Amazon.com cloud revenue growth eased. Exxon Mobil and Chevron reported a surge in earnings, despite easing of oil prices.
Stocks soared on Wall Street after Meta Platforms reported better-than-expected revenue and earnings, fueling a tech rally for the second day in a row. Meta extended a five-month surge to 170%.
Economic growth in the first quarter slowed from the previous quarter as consumer spending growth decelerated. Tech stocks led the gainers after parent of Facebook reported quarterly results showing higher advertising revenue.
Benchmark indexes traded higher on the back of a rally in tech stocks powered by Microsoft and healthier earnings from several companies including McDonald's, Chipotle Mexican Grill and CoStar Group.
Benchmark indexes advanced in pre-market trading after Microsoft reported sharply higher sales and earnings and Google's parent Alphabet also reported less-than-expected decline in advertising revenue.
Regional bank stress was added to a growing list of worries as investors struggled to understand interest rate path and how falling sales are likely to impact earnings in the coming quarters.
Caution prevailed on Wall Street ahead of earnings from big tech companies. The latest batch of earnings including UPS and PepsiCo failed to inspire confidence. First Republic's losses in securities assets highlighted the problem faced by banks of all sizes.
Stocks seesawed and major averages traded in a tight range as the earnings season kicks into the top gear with at least 300 companies scheduled to report quarterly results this week.
Investors are still in the early stages of evaluating how the future higher rates and weak or negative economic growth are likely to impact corporate earnings in the next two to three quarters.
Stocks were in a holding pattern after corporate earnings barely met lowered expectations. Economic data this week also suggested labor market tightness but slowing economic activities in many sectors.
