The first week of May is set to be a busy one for investors, with several important announcements on the docket. These include updates from the Federal Reserve, Apple (AAPL), and the release of the April jobs report.
Before the opening bell on Monday, investors are expected to receive resolution on the US government's efforts to rescue troubled bank First Republic (FRC). According to Yahoo Finance's David Hollerith, a deadline of 12:00 p.m. ET on Sunday had been set for offers to buy the bank, and it is believed that JPMorgan Chase (JPM) and Bank of America (BAC) are among those weighing bids following a government takeover of First Republic.
On Wednesday afternoon, the Federal Reserve is set to announce its latest policy decision. Investors expect the central bank to raise interest rates by another 0.25%, as it continues to fight stubborn inflation well above its 2% goal. This would push the Fed’s benchmark rate to a range of 5%-5.25%, the first time it has breached 5% since July 2007.
On Thursday after the closing bell, Apple will release its latest quarterly earnings. Investors will be watching closely for any signs of a slowdown in spending, similar to what was called out by Amazon last week. With Apple set to release new VR headsets later this year, investors will also be curious about the company's AI strategy.
Other notable earnings reports this week include AMD (AMD), Starbucks (SBUX), Ford (F), Pfizer (PFE), and Uber (UBER).
On the economic data front, key updates on activity in the manufacturing and services sectors of the economy, as well as the latest data on job openings, will be released. The April jobs report is expected to show 180,000 nonfarm payroll jobs were added to the US economy last month with the unemployment rate ticking slightly higher to 3.6%.
Last week, big tech earnings from Microsoft (MSFT), Alphabet (GOOGL), and Meta Platforms (META) were positive for the most part, catalyzing a 1.3% rise in the tech-heavy Nasdaq for the week. However, GDP data out Thursday was disappointing, and Amazon's results cast some doubt over the tech sector's rebound.
Year-to-date, the Nasdaq is up nearly 17%, while the S&P 500 is up closer to 8.5% and the Dow Jones Industrial Average has gained just less than 3%. The next major test for markets awaits on Wednesday afternoon with the Fed's policy decision.
Investors will be watching Fed Chair Jay Powell's comments closely for any indication of future rate hikes. While a June rate hike is not the incumbent scenario, economists at JPMorgan believe that the next move is more likely up than down. However, others, such as Ryan Sweet, chief US economist at Oxford Economics, believe that the May hike will be the final one of this tightening cycle.
Ultimately, the Fed's aggressive rate hike path has tightened credit markets and raised concern over the health of the regional banking sector, particularly in the wake of the Silicon Valley Bank collapse. With the markets remaining resilient, investors will be hoping for positive news from this week's announcements to maintain the upward momentum.
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