Stocks Rally Despite Fed Concerns: Big Tech Earnings and Economic Data in Focus

Stocks rebounded last week as tech earnings sparked a rally in markets, despite concerns that the Fed may keep interest rates higher for longer. The Nasdaq Composite surged more than 4%, the S&P 500 jumped almost 3%, and the Dow Jones Industrial Average rose less than 1%.

Looking ahead, investors are gearing up for a busy week with a Fed meeting, the April jobs report, and earnings from tech giants like Apple and Amazon. Additionally, updates on job openings, activity in the services and manufacturing sectors, and consumer confidence are on the calendar.

Companies reporting earnings this week include AMD, Coca-Cola, Eli Lilly, McDonald’s, Novo Nordisk, Starbucks, and Super Micro Computer.

The latest decision on interest rate policy from the Federal Open Market Committee is expected on Wednesday, followed by a press conference with Fed Chair Jerome Powell. Investors will be closely monitoring how the Fed interprets recent inflation data, as the market has adjusted its rate cut expectations.

Recent data on inflation has been higher than expected, leading to speculation that the Fed may take a more hawkish stance. Investors are now pricing in a lower chance of a rate cut in July compared to a month ago.

The labor market remains a key focus, with the April jobs report expected to show an increase in nonfarm payroll jobs and steady unemployment rates. Economists are optimistic that the strong labor market can help keep inflation in check.

Big Tech earnings have been a mixed bag, with Meta’s plans for heavy spending on AI causing investor concern, while Alphabet’s positive earnings results led to a surge in its stock price. This week, all eyes will be on Apple and Amazon as they report their earnings.

Overall, this week wraps up the busiest period of earnings reporting for the S&P 500, with companies either beating or missing expectations. Profit margins are on the rise, indicating a positive trend for corporate earnings.

In conclusion, the markets are poised for a week filled with key economic data releases, earnings reports, and updates from the Fed. Investors will be closely watching how these factors impact market sentiment and future expectations.