Market Recap

Investors focused on key economic data and a Fed policy statement this week. After a mixed GDP reading and expected Fed decision, indices began to rally as the SPX broke through its key 1405 resistance point. Also rallying through resistance was the XLF as it was able to break the 27 level. Equities were not the only beneficiary of the Fed decision as the dollar rallied in response to the hint of no further rate cuts.

Technology bounced to the upside this week as we saw a rotation into tech while some air was let out of commodities. However given the current environment of slow growth with high inflation we expect this sell-off in commodities to be short-lived. The markets next test will be to hold the 1405 level, if the SPX does, then probabilities favor this latest move will be sustainable.

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Top Healdines
 

  • This week first quarter GDP growth came in at a positive 0.6%, though economists warned that this number may be inflated due to rising inventories and not the actual flow-down of goods to consumers. (4/30)

  • In attempt to shore up its balance sheet, struggling bank giant Citigroup (C) announced that it will raise roughly $4.5 bln through issuing new shares at a discount. CFO Gary Crittenden stated that the move will optimize the company’s capital structure and strengthen their balance sheet. (4/30)

  • As expected the Fed cut rates by a quarter point on Wednesday afternoon. Investors believe that this will be the last rate cut in the near future as markets begin to rebound. The Fed funds rate now sits at 2%, down from 4.25% at the beginning of the year. (4/30)

  • Dow component Exxon Mobil (XOM) made headlines on Thursday as the oil giant grew profits by 17% over 1Q a year ago, but was met with skepticism from investors as analysts predicted stronger results. (5/1)


Earnings Snapshot
 

  • Verizon (VZ) reported strong results this week as the company saw 1Q EPS of 57 cents per share, up from 51 cents per share a year ago. (4/28)

  • Siemens AG (SI) shares struggled this week as the company saw 2Q net income fall 67% while revenue remained flat. (4/30)

  • Cardinal Health (CAH) saw net income skyrocket to $356 mln in 3Q, up from $19 mln a year ago. (5/1)

  • Marathon Oil (MRO) reported a 2% rise in net income for the first quarter, exceeding analyst estimates. (5/1)


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