Wall Street Muted on Monday Ahead of Key Announcements

Wall Street remained relatively flat on Monday at the beginning of a big week of economic and earnings announcements. Let’s take a look at what’s been going on in the markets and what lies ahead this week.

US Stocks End Week with Gains

Despite starting the week down after US President Donald Trump launched an attack on the Federal Reserve Chair Jerome Powell, Wall Street ended last week in the green.

Last week's turnaround came after Washington appeared to soften its rhetoric towards Beijing, President Trump dismissed the idea of firing Fed Chair Powell and Alphabet released expectation-beating results, the latter of which we’ll look at in more detail later. 

Subsequently, the Dow Jones, S&P 500 and Nasdaq all notched weekly gains of 2.5%, 4.6% and 6.7% respectively.

Wall Street’s Muted Monday

On Monday, US Treasury Secretary Scott Bessent said in an interview that it was up to China to de-escalate trade tensions between the world’s two largest economies.

He further noted that the US have “had many countries come forward and present some very good proposals” on trade and highlighted a potential deal with India in the near future.

However, trading on Wall Street remained muted on Monday. The Dow Jones and S&P 500 eked out gains of 0.3% and 0.1% respectively whilst the Nasdaq dropped by 0.1%. Meanwhile, the Dollar Index edged down 0.5% and gold rose 1.5%.

Wall Street’s subdued Monday session started a week which is full of important economic announcements.

On Wednesday, the US, France, Germany, Italy and the euro area all release first quarter Gross Domestic Product (GDP) data. These GDP announcements come after the International Monetary Fund (IMF) cut its annual growth forecasts for a range of nations last week.

On Friday, Eurostat will announce euro area inflation data for April and, later in the day, the Bureau of Labor Statistics will release its Employment Situation Report for April, which includes the closely watched nonfarm payrolls.  

Earnings Watch

We are also in the thick of earnings season and, with around 180 S&P 500 components set to report earnings, this week’s a big one.

Just as interesting, if not more so, than the results themselves will be company guidance, as investors look for clues as to how ongoing uncertainty surrounding trade policy could impact future earnings.

This week, four of the so-called Magnificent Seven technology stocks are slated to announce first quarter results, with Microsoft and Meta Platforms due on Tuesday and Apple and Amazon due on Thursday.

But what about some of the announcements which have already taken place?

Alphabet

On Thursday, Google parent Alphabet announced first quarter earnings which beat expectations.  

Quarterly revenue jumped 12% to $90.2 billion and Earnings per Share (EPS) jumped 97% to $2.81. Both numbers were higher than had been expected by analysts. 

Revenue from Google Search jumped almost 10%, with Google’s AI Overview feature attracting 1.5 billion users per month. Google Cloud also continued to help drive overall growth, with segment revenue jumping 28% to $12.2 billion and operating profit soaring 142% to $2.2 billion. 

Nevertheless, Chief Business Officer Philipp Schindler noted on the earnings call that Alphabet are “not immune to the macro environment”. He further noted that changes to the de minimis exemption pose a “slight headwind” to its advertising business from Asian retailers.

Procter & Gamble

Also on Thursday, Procter & Gamble (P&G) - which owns renowned brands such as Oral-B, Gillette and Fairy – announced quarterly earnings which fell short of expectations.

Net sales dropped by 2% to $19.8 billion whilst EPS rose less than expected by 1% to $1.54.

The consumer goods company also trimmed guidance for its current fiscal year which ends in June. It now expects sales growth to remain flat, down from a previously forecast range of 2%-4%. Core EPS outlook was also cut to a range of $6.72 to $6.82, down from previous guidance of $6.91 to $7.05.

During a call with the media, P&G CFO Andre Schulten said that economic uncertainty had resulted in “a more nervous consumer” which contributed to falling sales during the quarter. 

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