U.S. stocks are pointing to a rally on Tuesday as investors digest a flurry of quarterly earnings ahead of the release of results from some of the country’s most prominent tech companies later in the week.
The easing of concerns about a major conflict in the Middle East, following Iran’s lack of immediate response to Israel, has boosted investor confidence.
Tesla opens the curtain on tech industry results
Attention is keenly on the quarterly earnings season, with electric vehicle maker Tesla (TSLA) scheduled to announce its results after the closing bell.
The electric vehicle maker is bracing for what analysts expect to be a challenging quarter following its first quarterly decline in four years.
Tesla is not alone, four companies from the group often referred to as the ‘Magnificent Seven’ tech stocks will also release their quarterly results this week. Meta Platforms (META), owner of Facebook, will release its results on Wednesday, followed by Microsoft Corporation (MSFT) and Alphabet (GOOGL), owner of Google, on Thursday.
Markets will closely monitor whether the largest U.S. companies can justify significant valuation increases in the first quarter.
Ahead of these releases, shares of General Motors (GM) rose about 4% after the automaker raised its full-year estimate following solid half-year results, while GE Aerospace rose 3.8% after also raising its earnings estimates for the year.
Spotify (SPOT) shares rose 14% after the streaming music company beat estimates for premium subscribers, while Danaher (DHR) rose 6.4% after the life sciences firm also beat estimates for quarterly earnings and sales.
Novartis (NVS) shares rose 3% as the Swiss drugmaker will raise its full-year 2024 estimates after learning that first-quarter results were better than previously believed.
On the flip side of the coin, JetBlue (JBLU) fell about 10% as the low-cost airline cut its annual revenue estimates after reporting not-so-solid first-quarter earnings, while PepsiCo (PEP) lost about 2.4% after the soft drink company evidenced a slowdown in growth.
Awaiting Q1 PCE inflation and Q1 GDP
Today’s economic calendar includes March new home sales and April manufacturing and services PMI data from S&P Global.
All in all, attention will be directed towards Friday’s PCE price index data, the Fed’s preferred inflation gauge, which will offer additional insights into potential interest rate changes.
Before that, however, gross domestic product data will be released, potentially reflecting the resilience of U.S. economic growth during the first quarter of 2024.
Oil prices hinge on developments in the Middle East
Crude oil prices recorded slight declines on Tuesday, stabilizing after recent losses, amid ongoing volatility in the Middle East.
On Monday, crude oil prices dropped to more than three-week lows, bolstered by a strong belief that Iran and Israel will not escalate to a full-scale war, despite recent missile exchanges. Fear of this scenario was a primary driver of the recent increases in oil prices.
