US stocks stalled before the bell on Thursday, holding near all-time highs as investors watched for Iran’s response to a US peace proposal and braced for a fresh flood of earnings reports.
Contracts on the S&P 500 (ES=F) and the Nasdaq 100 (NQ=F) were little changed on the heels of record-high closes for the tech-exposed benchmarks. Dow Jones Industrial Average futures (YM=F) ticked up 0.2%.
Iran is said to be evaluating a US proposal to end the near-10-week war, and it is expected to give its response as soon as Thursday, CNN reported. The signs of progress toward relieving the blocked Strait of Hormuz pushed Brent (BZ=F) oil futures below $100 a barrel, helping spur a rally in gold (GC=F) as inflation worries eased.
Market sentiment also got a lift from this week’s steady march of tech earnings, indicating strength in the AI trade. Shares in Arm (ARM) initially rose on the chip designer’s upbeat revenue forecast, but sank in premarket trade on concerns about a lack of chip supply.
Thursday’s earnings docket brings reports from McDonald’s (MCD), Shake Shack (SHAK), and Papa John’s (PZZA) before the market opens, marking the start of another packed day of results.
In a busy week for labor data, Thursday brings a Challenger update on layoffs in April, watched for signals on the emerging impact of AI. A weekly reading on jobless claims is also due, setting the stage for the all-important monthly jobs report on Friday.
In a note to clients Wednesday morning, the team at Bespoke Investment Group noted the recent rally in semis is “one of the most epic runs in history.”
… As a group, Bespoke noted that the Philly Semiconductor Index is 56% above its 200-day moving average.
For readers who aren’t technically inclined, the 200-day moving average is the average price of an asset over the last 200 trading days, or roughly 10 months, and can best be thought of as where the long-term trend for something — a stock, an ETF, an index — sits. Moves far above or below this level indicate prices that may be overheated or oversold.
Anything trading 56% of its 200-day moving average, in other words, is on a historic heater. The only other two times the group was this far above its 200-day were July 1995 and March 2000.
Read more here in the takeaway from today’s Morning Brief.
One of the S&P 500’s best earnings seasons in 20 years comes with a catch
The S&P 500 (^GSPC) is not just beating Q1 earnings expectations. It’s blowing them up., writes Yahoo Finance’s Jared Blikre.
Here’s why that may not be all good news, from the Chart of the Day:
This earnings season is shaping up as one of the index’s strongest in 20 years, with profit growth accelerating, beat rates running hot, and analysts lifting estimates instead of cutting them.
That’s the good news.
The catch is that Wall Street may already be treating great earnings as the new floor.
Deutsche Bank is calling this “one of the best earnings seasons in 20 years,” and the charts show why. The share of S&P 500 companies beating earnings estimates is running well above normal, while quarterly profit growth is tracking near 25% — more than double the typical pace outside recessions.
… The bigger tell is what is happening to future earnings estimates.
Space analytics firm HawkEye 360 has raised $416 million in its U.S. initial public offering, the company said on Wednesday.
The Herndon, Virginia-based firm sold 16 million shares priced at $26 apiece in the IPO, giving it a valuation of roughly $2.42 billion. It had targeted a price range of $24 to $26 per share.
Traders work on the floor of the NYSE in New York
After a strong April, IPO activity is expected to pick up in the coming months, with HawkEye 360 and Suja Life set to test investor demand for defense technology and consumer brands, respectively.
HawkEye will also gauge appetite for space-technology offerings, as investors await a public filing from SpaceX that could bolster confidence among peers to pursue listings and tap equity markets.
Gold maintains after US-Iran peace push drives precious metal in positive direction
Bloomberg reports:
Gold (GC=F) steadied after its biggest daily advance since late March as traders assessed the optimism of a US-Iran deal to the end the war that has sent oil prices plunging and eased inflation concerns.
Bullion traded around $4,690 an ounce, after jumping 3% on Wednesday. Falling energy prices weighed on bond yields, while the dollar fell to pre-war levels, tailwinds for gold that’s priced in the US currency and doesn’t offer interest.
Iran is evaluating a fresh proposal from the US to end the near 10-week conflict, according to a person familiar with the matter, as China added its voice to global pressure to wrap up the war.
President Donald Trump has indicated on multiple occasions throughout the conflict that a deal is near, though none has materialized. He said on social media on Wednesday that the US will end its military campaign and lift its blockade of the Strait of Hormuz “assuming Iran agrees to give what has been agreed to, which is, perhaps, a big assumption.”
