U.S. Stocks, Futures Rise with Earnings Focus: Markets End – Yahoo Finance

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U.S. Stocks, Futures Rise with Earnings Focus: Markets End – Yahoo Finance

(Bloomberg) — European stocks rose for a second day after strong earnings from some of the region’s biggest companies, while positive economic data helped boost sentiment.

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The Stoxx Europe 600 index rose 0.6%, with the technology sector leading the advance. SAP SE jumped nearly 5% as booming demand for artificial intelligence fueled the German software maker’s growth. Drugmaker Novartis AG added as much as 5% after raising its full-year forecast. U.S. stock futures edged higher after Monday’s rebound on Wall Street.

Earnings are in focus for investors this week, with about 180 companies – representing more than 40% of the S&P 500’s market value – reporting results. The focus on corporate profits comes after a rout fueled by geopolitical fears and indicates the Federal Reserve will be in no rush to cut rates.

“We remain focused on the current earnings season, which could refocus investors’ attention on strong underlying fundamentals,” Citigroup Inc. strategists Mihir Tirodkar and Beata Manthey wrote in a note. “We would view the recent pullback as a buying opportunity.”

Tuesday’s PMI data reinforced bets that the European Central Bank is poised to start easing policy soon. Private sector activity reached its highest level in almost a year, driven by the dynamism of the services sector and the return to growth in Germany. Barring any economic surprises, a rate cut in June is a “fait accompli”, declared ECB Vice-President Luis de Guindos. The euro appreciated against the dollar.

Treasuries were flat ahead of a wave of bond auctions that will test investors’ appetites after yields hit their highest level in 2024. The greenback’s valuation was little changed.

Britain’s 10-year yield rose after the government increased the amount of bonds it plans to sell this financial year more than analysts expected, adding to what was already the second-largest program of gilts ever recorded.

Gold extended losses after its biggest daily decline in almost two years, with tensions easing in the Middle East and signs the Fed will keep rates higher to curb demand for longer. Oil climbed as traders assessed next steps between Israel and Iran amid signs of easing hostilities after an exchange of attacks last week.

High multiples

The challenge for S&P 500 returns this earnings season is that companies will need to produce earnings – and prospects – that support already high multiples. Indeed, the stakes are high for the “Magnificent Seven” megacaps, whose profits are expected to rise 38% in the first quarter from a year ago, eclipsing the 2.4% overall profit growth forecast by the S&P 500 over one year, according to Bloomberg Intelligence. .

But if we exclude Nvidia, the leading maker of chips for AI technologies, the group’s expected net profit growth falls to 23%. Nvidia, which Goldman Sachs Group Inc.’s trading desk called “the most valuable stock on planet Earth,” won’t report earnings for another month.

Investor positioning in mega-cap growth and technology stocks continues to be reduced, falling from the 97th percentile in early March to the 77th percentile today, according to Deutsche Bank AG strategists. The group remains the only sector where positioning is above the historical average, even if it is no longer extreme, write the strategists.

Key events this week:

  • New home sales in the United States, Tuesday

  • Tesla and PepsiCo results on Tuesday

  • BOE Chief Economist Huw Pill Speaks Tuesday

  • Germany IFO business climate, Wednesday

  • US durable goods, Wednesday

  • Results from IBM, Boeing and Meta Platforms, Wednesday

  • US GDP, wholesale stocks, initial jobless claims, Thursday

  • Results from Microsoft, Alphabet, Airbus, Thursday

  • Japan rate decision, Tokyo CPI, inflation and GDP forecasts, Friday

  • US personal income and spending, PCE deflator, University of Michigan consumer sentiment, Friday

  • Exxon Mobil, Chevron results, Friday

Some of the main market movements:

Actions

  • The Stoxx Europe 600 rose 0.6% as of 9:19 a.m. London time

  • S&P 500 futures rose 0.2%

  • Nasdaq 100 futures rose 0.3%

  • Dow Jones Industrial Average futures rose 0.2%

  • The MSCI Asia-Pacific index rose 0.6%

  • The MSCI Emerging Markets Index rose 0.7%

Currencies

  • The Bloomberg Dollar Spot Index fell 0.1%

  • The euro rose 0.3% to $1.0683

  • The Japanese yen was little changed at 154.83 per dollar.

  • The offshore yuan was little changed at 7.2569 per dollar.

  • The British pound rose 0.1% to $1.2364

Cryptocurrencies

  • Bitcoin fell 0.7% to $66,095.77

  • Ether fell 0.9% to $3,161.93

Obligations

  • The yield on 10-year Treasury notes rose one basis point to 4.62%

  • The German 10-year yield changed little at 2.49%

  • The UK 10-year yield rose a basis point to 4.22%

Raw materials

  • Brent crude rose 1% to $87.83 a barrel

  • Spot gold fell 0.8% to $2,309.08 an ounce

This story was produced with the help of Bloomberg Automation.

–With help from Jessica Menton, Winnie Hsu and Michael Msika.

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