On Wednesday, US stocks experienced mixed trading as investors eagerly awaited the release of first-quarter GDP data and absorbed the latest round of corporate earnings. The impending GDP figures are anticipated to provide insights into the strength of the economy and offer clues regarding the Federal Reserve’s future monetary policy decisions.
According to economists at the Atlanta Fed, the US economy is expected to have expanded by 2.7% in the first quarter. However, an exceptionally robust GDP print could heighten concerns about inflationary pressures, potentially influencing the Fed to maintain its current policy stance to prevent further inflationary risks.
Market sentiment regarding interest rate cuts has shifted, with investors now pricing in only one or two rate cuts for the year, a significant decrease from the seven cuts forecasted at the beginning of 2024, as indicated by the CME FedWatch tool.
Amidst the economic data anticipation, investors are also closely monitoring corporate earnings reports, which have thus far demonstrated resilience. The S&P 500 is expected to register a 7% year-over-year growth in earnings, with 74% of reporting companies surpassing earnings estimates.
Major tech companies, including Facebook parent Meta Platforms, Microsoft, and Alphabet, are scheduled to report earnings after the closing bell, further contributing to market volatility and sentiment.
Tesla, in particular, saw a notable 11% surge in its stock price following its latest earnings report. Despite revenue falling short of expectations, investors were buoyed by the company’s announcement of plans to introduce a low-cost electric vehicle next year.
At the market close, the S&P 500 edged slightly higher, the Dow Jones Industrial Average dipped slightly, and the Nasdaq Composite posted modest gains.
Meanwhile, in other financial markets:
- West Texas Intermediate crude oil and Brent crude both experienced slight declines.
- Gold prices edged lower.
- The 10-year Treasury yield rose by four basis points.
- Bitcoin witnessed a 3.29% decrease in its price.
The economic landscape remains dynamic, with various factors influencing market movements and investor sentiment. As traders navigate through earnings season and economic data releases, continued vigilance and adaptability are paramount to capitalizing on opportunities and managing risks in the evolving market environment.