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Stocks rebound as investors shake off Mideast tensions, focus on earnings


US stocks rose Monday as worries over the fallout from Iran’s attack on Israel eased, allowing focus to return to earnings season and inflation risks to rate-cut hopes.

The S&P 500 (^GSPC) added roughly 0.5%, while the Dow Jones Industrial Average (^DJI) moved up 0.5%, or over 360 points, after ending the week with sharp losses. The tech-heavy Nasdaq Composite (^IXIC) was up 0.4%.

Focus is shifting as investors shrug off initial concerns of a full-blown war in the Middle East after Iran’s direct missile and drone strike on Israel on Saturday. Efforts by the US to encourage Israel not to retaliate have helped settle nerves, in part given the well-telegraphed attack allowed damage to be contained.

Stocks have come under pressure in recent days as earnings season got off to a lackluster start and concerns persisted that inflation has stalled in cooling to the Federal Reserve’s 2% target. Traders have scaled back bets on the depth of Fed interest-rate cuts this year in the face of disappointing economic data.

Retail sales in March increased 0.7% from the previous month, as consumers continued to spend despite a higher interest rate environment. The monthly reading topped economist expectations for a rise of 0.4%, according to Bloomberg data.

Goldman Sachs (GS) on Monday got this week’s earnings off to an upbeat start, as investors look to corporate results to revive the early 2024 equity rally. Shares for the Wall Street lender rallied more than 5% after first-quarter profit jumped to beat estimates.

In commodities, oil prices fell more than 1% on Monday after rising ahead of Iran’s air strike. West Texas Intermediate crude futures (CL=F) were trading around $85 a barrel, while Brent futures (BZ=F) neared the $90 mark.

Meanwhile, the 10-year Treasury yield (^TNX) added about 10 basis points to trade near 4.61%, coming back from a sharp fall on Friday to eye a return to last week’s five-month high. Fellow safe haven gold (GC=F) slipped after gaining as much as 1.2% last week as Middle East tensions escalated.

Live6 updates

  • Goldman Sachs stock rallies, leads financial sector higher

    Financial stocks (XLF) rose on Monday, led by shares of Goldman Sachs (GS).

    Yahoo Finance’s David Hollerith reports:

    Profits at Goldman Sachs rose 28% in the first quarter as investment banking revenues surged, giving CEO David Solomon some needed momentum at the start of 2024.

    Net income was $4.1 billion, beating analyst expectations. Its revenues of $14.2 billion also surged from a year ago, thanks in part to a 32% rise in investment banking fees. Asset and wealth management revenues jumped, as did trading.

    Goldman’s stock rose as much as 5% in early trading Monday before paring some of those gains.

    Read more here.

  • Trump Media stock tanks 15% on move to issue millions of shares

    Shares of Trump Media & Technology Group (DJT) slid as much as 15% after the parent company of Donald Trump’s social media platform Truth Social filed to exercise warrants which could mean the issuance of almost 21.5 million common stock.

    Monday’s slide was an extension of last week’s sell-off after an updated regulatory filing showed the company taking on heavy losses and facing “greater risks” associated with the former president’s ties to the platform.

    Trump Media went public on the Nasdaq in late March after merging with special purpose acquisition company Digital World Acquisition Corp.

    The stock rose as high as $66 per share on its first day of trading. On Monday shares were hovering just above $27 per share.

  • S&P 500 rebounds as investors turn focus on earnings packed week

    Stocks rose on Monday amid easing concerns over the fallout from Iran’s attack on Israel over the weekend. Investors turned their focus on earnings season as Goldman Sachs (GS) shares rose more than 5% after the bank’s first-quarter profit jumped to beat estimates.

    The S&P 500 (^GSPC) added roughly 0.8%, while the Dow Jones Industrial Average (^DJI) moved up about 0.8% after ending the week with sharp losses. The tech-heavy Nasdaq Composite (^NDX) rose 0.9%.

    Oil prices fell about 1% following Iran’s air strike, signaling easing concerns of any supply disruption. West Texas Intermediate crude futures (CL=F) were trading around $85 a barrel, while Brent futures (BZ=F) neared the $90 mark.

    Retail sales increased 0.7% in March, higher than a 0.4% month-over-month increase expected by economists.

  • Salesforce could be deal-hunting

    Several reports have surfaced that Salesforce (CRM) is nearing a deal to buy data management company Informatica (INFA) for $11 billion or so — hence both tickers are tops on the Yahoo Finance ‘Trending Ticker‘ page this morning.

    Salesforce shares are down on the news as the vibe on the Street is that it’s unclear if the business would be an amazing fit (it has lower margins than Salesforce, for one).

    The Street has also liked a Salesforce more focused on growing profit margins the past year after dealing with a surprise activist investor attack (in part because of a string of dilutive acquisitions). This would be Salesforce’s first big deal since buying Slack in 2021 for $28 billion.

    Informatica’s stock is lower as Salesforce may not offer a premium for the company, per reports.

    Knowing Salesforce co-founder and CEO Marc Benioff, I am surprised a bit by the potential return to deal-making. He has told me several times in recent months that Salesforce remains focused on growing profit margins — in fact, the company disbanded its M&A team last year!

    Nonetheless, Benioff loves doing big deals and the company has the cash to do them. So, why not.

  • Eyes on Nvidia and Intel

    Citigroup is opening “upside catalyst watches” on shares of Nvidia (NVDA) and Intel (INTC) after the chipmakers’ stocks sank in the past month.

    On Nvidia:

    “Recent supply chain discussions indicate demand visibility has extended into the first half of 2025 with calendar year 2024/2025 GPU [chip] unit outlook well aligned with our 4.3 million/5.2 million base case model. We expect supply chain commentary from key foundry/memory suppliers during earnings and Computex Taiwan on June 2nd where Nvidia CEO Jensen Huang will deliver a keynote which could be positive catalysts for the stock.”

    On Intel:

    “Intel stock is down ~29% year to date and we believe the stock is experiencing negative sentiment due to the foundry businesses losses. Given the positive March notebook data of a 44% month on month increase, we believe there is upside to consensus estimates and expect the stock to trade higher as Intel derives roughly 31% of revenue from notebook CPUs.”

    Further analysis: I took a slightly contrarian view on Nvidia’s stock price action in the Sunday Morning Brief newsletter. More on this one here.

  • Keep connecting the dots on the Iran/Israel conflict

    While markets are handling the weekend news of Iran’s strike on Israel in their stride, it’s important to keep on connecting the dots on these geopolitical risks.

    Specifically as it pertains to oil, which Citi thinks could now hit $100 a barrel.

    I liked the dot-connecting the Deutsche Bank team did on the oil front this morning:

    “Most directly, the effects of higher oil prices will be felt globally, and this is coming at a time when there’s already concern about sticky inflation in several countries. That’s something that could create a dilemma for central banks, as we also found out after Russia’s invasion of Ukraine in 2022. On the one hand, there is the risk that a geopolitical shock hurts growth, bringing forward the timing of rate cuts. Indeed, markets were clearly pricing that risk on Friday, with the chance of a Fed rate cut by June moving up from 24% to 30%, although that’s since moved back to 24% this morning. But then again, if higher oil prices lead to more inflation and there are second round effects on other prices, then that could mean monetary policy has to stay in restrictive territory for longer. So the potential effects can work both ways.”



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Tags :Dow Jones Industrial AverageDrone strikeearnings seasoninflation risksIranIsraelNASDAQ Composite
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