Week Ending May 2nd, 2024 

Friday's Market Moves

Dow Jones - 41,317.43 (+1.39%) 

Nasdaq - 17,977.73 (+1.51%) 

S&P 500 - 5,686.87 (+1.47%) 

• Weekly gains for every major index. U.S. stock indexes rose on Friday after an employment report exceeded most economists’ expectations. The major U.S. indexes posted weekly gains of around 3% as stocks extended the previous week’s positive trend. For the S&P 500, Friday’s gain marked the ninth positive day in a row―that index’s longest such streak since November 2004.
• Leaving April behind. As of April 8, the S&P 500 had tumbled 12.6% from its closing level at the end of March; over the next three weeks, it recovered nearly all that amount to finish only slightly negative overall. 
• New job data. The economy generated 177,000 new jobs in April, above consensus expectations for around 130,000. The unemployment rate held steady at 4.2%.   
• Economy news. U.S. GDP contracted at a 0.3% annual rate in this year’s first quarter, marking the first negative reading since the first quarter of 2022.
• An earnings upgrade. Nearly three-quarters of the way through earnings season, analysts have lifted their overall expectations again. As of Friday, first-quarter earnings for S&P 500 companies were expected to rise an average of 12.8%, based on reports already released and forecasts for companies that haven’t yet reported, according to FactSet. Two weeks earlier, the projected earnings growth rate was 7.0%.
• Oil dropped. The price of U.S. crude oil fell to around $58 per barrel as April came to a close on Wednesday, and the commodity’s 18% decline over the course of the month was the biggest since November 2021. On Friday afternoon, oil traded around $58.50, down 7% for the week. 
• Treasury yields went higher. Compared to last Friday, two-year Treasury yields rose ~8 basis points (3.834% vs. 3.756%), 10-year yields moved up ~6 basis points (4.324% vs. 4.266%) and 30-year yields ticked up ~7 basis points (4.794% vs. 4.721%).
• Where are interest rates going? It’s widely expected that the U.S. Federal Reserve will keep interest rates unchanged again when it concludes a two-day meeting on Wednesday. However, rate cuts could still be coming; Friday’s prices in interest rate futures markets implied that most investors were expecting at least three quarter-point rate cuts by year end, according to CME Group’s FedWatch tool.
• China is considering trade talks but... Reports surfaced last week that China was considering trade talks with the U.S. But in an ominous note, Japan's finance minister said its U.S. Treasury holdings could be a card in trade talks, Bloomberg reported. That doesn't necessarily mean Japan is considering sales of its more than $1 trillion in U.S. Treasury note holdings.
• Mega cap earnings dragged tech. Both Amazon and Apple dropped early on Friday after delivering disappointing results as key profit drivers fell short. The 16.9% year-over-year growth in the Amazon Web Services cloud business missed Wall Street's expectation and was down sequentially from 19%.  Amazon did however beat earnings and revenue consensus and delivered second quarter revenue guidance roughly in line with expectations. Apple's results exceeded Wall Street's expectations on earnings per share, revenue, and iPhone sales. But the quarter fell just short on the services side, which grew 12%. This was slower than expected. Apple said U.S. tariffs could cost it $900 million in the current quarter. The iPhone maker also subsequently got downgraded by two analysts.
• Energy company activity. ExxonMobil rose 0.5% after beating Wall Street's earnings expectations. The company continued its stock buybacks despite falling crude oil prices. Chevron pulled back 1.86%. It's slowing the pace of its buybacks and said profit declined as oil prices fell.
• Roku shares dropped. The stock fell 8.4% after offering an outlook that came in below Wall Street's consensus views.
• Amgen jumped on earnings. The stock rose 1.5% as it beat analysts' earnings and revenue expectations and reaffirmed its fiscal 2025 guidance. It reported strong demand with 11% product sales growth.
• Airbnb sank 5.1% ahead of the open. The company delivered weaker-than-expected guidance and citing declining demand for travel, Bloomberg reported.
• MicroStrategy moved higher. The stock climbed 1.8% despite the crypto-related company reporting a wider loss on falling revenue.
• Block dropped more than 21%. The stock sank ahead of the open after the tech and financial services company lowered its full-year earnings guidance. Quarterly revenue came up short.
• Reddit saw better than expected revenue. The stock climbed 7.3% ahead of the open and earnings also surpassed analysts' expectations.

• Intel (INTC)
• Tesla (TSLA)
• Amazon (AMZN)
• Apple (AAPL)
• Microsoft (MSFT)

Biggest Gainers

• Perdoceo Education Corp. (PRDO) – 22.49%
• Duolingo (DUOL) – 21.61%
• Pony AI (PONY) – 21.50%
• iRhythm Technologies (IRTC) – 20.75%
• Aurora Innovations (AUR) – 18.31%

Biggest Losers

• Westlake Corp. (WLK) – 13.46%
• Cytokinetics (CYTK) – 12.98%
• Liberty Global Ltd. (LBTYK) – 12.66%
• Viavi Solutions (VIAV) – 12.30%
• Workiva (WK) – 9.38%

Weekly Notables

Warren Buffet to Step Down as CEO

The legendary investor known as the Oracle of Omaha, Warren Buffett, is soon stepping down as chief executive of Berkshire Hathaway.

The 94-year-old announced his plans over the weekend and also recommended to the board of the company that Greg Abel should become the CEO at the end of this year. “I think the time has arrived where Greg should become the chief executive officer of the company at year end,” Buffett said at Berkshire Hathaway’s annual meeting in Omaha.

Abel is chair of Berkshire Hathaway Energy and vice chair of Berkshire’s operations excluding insurance. Buffett has previously signaled that Abel would succeed him as CEO. 

Amazon Beat on Top and Bottom Line

E-commerce giant Amazon reported its first quarter earnings after the bell on Thursday beating on the top and bottom line, but offered lighter than anticipated guidance for its Q2 operating income. For the quarter, Amazon saw earnings per share (EPS) of $1.59 on revenue of $155.7 billion. Wall Street was ancitipating ESP of $1.36 and revenue of $155.1 billion, according to Bloomberg consensus estimates. The company reporterd EPS of $0.98 and revenue of $143.3 billion in Q1 last year. AWS revenue came in at $29.2 billion versus expectations of $29.3 billion. Jeff Bezos also has disclosed a plan to sell up to 25 million shares of Amazon stock over a period ending May 29, 2026, according to a securities filing.

Kohl’s CEO Got the Boot

Kohl’s CEO Ashley Buchanan was fired after making ‘highly unusual’ business deals with his romantic partner according to a report.

The retailer fired Buchanan on Wednesday after an investigation found he told the company to enter two business deals involving a romantic partner. Buchanan took the position only in January.  According to the investigation, the ousted CEO directed Kohl’s to enter a “highly unusual” business deal with a company whose founder he had personal ties to, SEC filings indicate. The terms of that business deal were “favorable” to the vendor, the filings state. He also entered Kohl’s into a “multi-million dollar” consulting agreement with a team that the individual was part of, the filings indicate. He then failed to disclose that personal relationship to Kohl’s, violating the company’s code of ethics.

The Week Ahead

• Potential market moving catalysts this week: - Monday (5/5): ISM Services. Tuesday (5/6): Trade Balance. Wednesday (5/7): Consumer Credit, EIA Crude Oil Inventories, FOMC rate Decision, MBA Mortgage Applications Index. Thursday (5/8): Continuing Claims, EIA Natural Gas Inventories, Initial Jobless Claims, Productivity-Preliminary, Unit Labor Costs, Wholesale Inventories. Friday (5/9): -no reports.
• Earnings on deck this week: Monday (5/5): Ares Management Corp. (ARES), Cummins Inc. (CMI), BioNTech SE (BNTX), Tyson Foods (TSN), Palantir Technologies Inc. (PLTR), Vertex Pharmaceuticals (VRTX), Williams Companies Inc. (WMB), Realty Income Corp. (O), Clorox Co. (CLX). Tuesday (5/6): Duke Energy Corp. (DUK), TransDigm Group Inc. (TDG), Constellation Energy Corp. (CEG), Marriott International Inc. (MAR), Datadog Inc. (DDOG), Advanced Micro Devices (AMD), Arista Networks (ANET), Energy Transfer (ET), Coupang Inc (CPNG), Electronic Arts Inc. (EA). Wednesday (5/7): Uber Technologies (UBER), Walt Disney Co. (DIS), Shopify Inc. (SHOP), Arm Holdings PLC (ARM), Applovin Corp. (APP), DoorDash Inc. (DASH), Fortinet Inc. (FTNT), Carvana Co. (CVNA). Thursday (5/8): ConocoPhillips (COP), Cheniere Energy Inc. (LNG), Sempra (SRE), McKesson Corp. (MCK), Coinbase Global Inc. (COIN), Cloudflare Inc. (NET). Friday (5/9): Enbridge Inc. (ENB), Sun Life Financial Inc. (SLF), Pembina Pipeline Corp. (PBA), Plains All American Pipeline LP (PAA).