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S&P 500 Ends Losing Streak; Apple, Amazon, and Fed on Deck This Week

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After three straight negative weeks, the S&P 500 bounced back last week, rising 2.7% to 5,100. Meanwhile, the Nasdaq Composite surged 4.3% last week, and the Dow Jones Industrial Average gained just 0.7%. The small-cap Russell 2000 also had a solid week, jumping 2.8%.

The increases were largely due to solid earnings reports from a few Magnificent Seven stocks, which offset some choppy economic news. Let’s take a look at the highlights from last week and see what’s ahead this week.

Good news from Tesla outweighs bad

One of the top gainers last week was Tesla (NASDAQ:TSLA), which gained 14% over the five-day period to close the week at $168 per share. The rally was long overdue for the EV maker as it has been one of the worst stocks on the S&P 500 this year, plunging 32%.

Tesla did not have a great first quarter; in fact, it posted its biggest year-over-year sales decline in more than a decade. However, that had probably already been baked into its stock when Tesla dropped its earnings results last Tuesday after the market close. As it typically does each quarter, the automaker had released its delivery and production numbers for the first quarter in early April.

However, what lifted Tesla stock last week was the news that it plans to accelerate the timeline for production of its new line of more affordable models to late 2024 or early 2025. It was likely a sign for those investors waiting for good news to buy in, as the stock had become undervalued.

Big gains for Alphabet and NVIDIA

Another top stock last week was Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL), which jumped 11.5%. Google’s parent company posted strong earnings results last Thursday that saw its revenue jump 15% and net income rise 27% year over year — easily topping estimates.

Alphabet reported a 14% rise in Google Search revenue and a 30% surge in its cloud business. For the full year, it expects to expand its operating margin versus its 2023 margins and continue to invest in capital expenditures. The money will be spent on upgrading its infrastructure, reflecting the opportunities it sees in artificial intelligence across its business.

The other big news for Alphabet was it launched its first-ever dividend, following in the footsteps of Meta Platforms (NASDAQ:META), which introduced its first dividend in Q1. Alphabet will begin with a 20-cent-per-share quarterly dividend payable on June 17. It also announced a $70 billion stock buyback plan.

While NVIDIA (NASDAQ:NVDA) did not release earnings results last week, it had the biggest gain of all the Magnificent Seven stocks, climbing 15.1%. It was likely fueled by the solid performances of some of the big technology stocks and their plans to continue to invest in AI and data centers, which helps NVIDIA.

Microsoft (NASDAQ:MSFT) also posted solid results last week, with revenue up 17% and net income jumping 20% year over year. The stock finished the week with a return of about 2%.  

Fed to meet this week

The Big-Tech earnings reports offset some uneven economic news last week, as the GDP notched its lowest growth since 2022 in the first quarter, rising just 1.6%. Meanwhile, the Personal Consumption Expenditures (PCE) index, which the Federal Reserve uses to gauge interest-rate decisions, ticked up to 2.7% from 2.5% in February.

We’ll see if the PCE has any impact on the Fed’s decision regarding interest rates as it is due to meet this week. The central bank is set announce its next decision on interest rates on Wednesday at 2 p.m. Eastern, and most economists expect there to be no movement.

Also this week, more Big-Tech companies are scheduled to post earnings results, including Amazon (NASDASQ:AMZN) after the market close on Tuesday and Apple (NASDAQ:AAPL) after the closing bell on Thursday. Thus, we expect this to be another big week for the markets.