Morning in New York: reporting season will support the bulls

Daily review and forecast of events on the U.S. stock market from Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

The dynamics on stock exchanges continues to be determined by the development of the Middle East conflict. The situation around the Strait of Hormuz remains tense after the US forces started blockading Iranian ports. At the same time, the signals about the possible continuation of the dialog between Washington and Tehran and statements of the US Vice President J.D. Vance that the progress in the negotiations depends on the Iranian side, somewhat improve the market sentiment. However, the risk of disruptions in energy supplies remains high.

Macroeconomic data coming out this Tuesday is unlikely to have a significant impact on trading. The producer price index (PPI) for March will be released. The consensus expects the overall indicator to rise by 1.1% mom and the core indicator to rise by 0.4% mom after 0.7% and 0.5% respectively for February. The outperformance of the first indicator will be driven by a sharp rise in energy prices, while the dynamics of core inflation is more important for the market. Also today, the March NFIB Small Business Optimism Index will be released (consensus: 98 points, February: 98.8). The coincidence of the actual result with the forecasted one will confirm the continued caution of participants in this segment of the economy.

J.P. Morgan (JPM), Johnson & Johnson (JNJ), Citigroup (C), Wells Fargo (WFC), BlackRock (BLK ), CarMax (KMX ) and Albertsons (ACI) will report before the main session. Equity Bancshares (EQBK) and Mama's Creations (MAMA) will release results after the close.

Futures on S&P 500 show restrained positive dynamics. We assess the balance of risks for the upcoming session as neutral with increased volatility: geopolitical uncertainty and inflation expectations continue to put pressure on the market, while expectations related to the negotiations between the US and Iran, as well as moderate macro background do not give reasons for a pronounced decline.

- Bloom Energy (BE) shares soared 15% on the premarket after expanding its agreement with Oracle: the company will supply up to 2.8 GW of fuel cells to support demand for AI and cloud infrastructure.

- Credo Technology (CRDO) shares are up nearly 10% before the open after announcing the acquisition of DustPhotonics, which will be paid for with $750 million in cash as well as stock. There are also additional payments if targets are met. The deal will strengthen the acquirer's position in the fiber optic communications segment for data centers.

- Quotes Dell Technologies (DELL) and HP Inc. (HPQ) lose about 2% each on the background of refutation of Nvidia (NVDA) reports about the desire to acquire a major PC manufacturer. This leveled the speculative driver, which during the past session led to the growth of shares of Dell and Hp by 6.74% and 5.31%, respectively.

- Shares of Sana Biotechnology (SANA) are up more than 25% after announcing a collaboration with Mayo Clinic on a type I diabetes therapy and announcing its equity investment in Biotech.

- Allogene Therapeutics (ALLO) securities are losing about 7% before the open of main trading due to the announcement of plans to float $175 million in stock. The funds raised will be used for general corporate purposes, including clinical trials and R&D, as well as capital expenditures.

April 13 trading on American stock exchanges was in a steady plus and ended near the intraday highs. S&P 500 added 1.02%, NASDAQ 100 grew by 1.06%, Dow Jones rose by 0.63%, Russell 2000 - by 1.52%. The main support factors were the positive interpretation of the news concerning the situation around Iran and a pronounced rebound in the software segment after the sell-off at the end of last week. Against this backdrop, Microsoft (MSFT: +3.64%) stood out from the "Magnificent Seven" stocks. The securities of chipmakers and stocks with elevated Beta were in strong demand from buyers. The IT sector (XLK: +2.1%) was the leader of growth in the broad market on the back of the mentioned recovery of software developers' quotations and rally in stocks related to AI-infrastructure. Utility providers (XLU: -1.21%) were the outsiders.

The market played off signals about the possible continuation of the US dialogue with Iran and Donald Trump's readiness to give two more weeks to conclude an agreement between the parties to the conflict. At the same time, the failure of the negotiations held last weekend and the sea blockade of the Strait of Hormuz, which came into force, preserve the risks of a new escalation. Buyers were further supported by the start of the reporting season: expectations of strong corporate earnings have so far outweighed macroeconomic uncertainty and high energy prices.

Secondary housing sales in Ma declined 3.6% mom to 3.98 million on a year-over-year basis from 4.09 million in February, with a consensus of 4.03 million. The release confirmed that weak consumer confidence and softer employment dynamics continue to restrain housing demand. Treasury yields fell by 2-4 bps, while a moderate steepening of the curve supported risk appetite.

- Revolution Medicines (RVMD: +41.4%) reported successful results from its Phase III RASolute-302 study of daraxonrasib. Patients with previously treated metastatic pancreatic cancer receiving the drug achieved all primary and key secondary endpoints. The Company reported improved survival rates and plans to submit an application to the FDA for approval of this product.

- Leggett & Platt (LEG: +12.6%) will be acquired by Somnigroup for about $2.5 billion in a share swap. The deal, which implies a premium of about 13.7% to the closing price on April 13, is expected to be completed by the end of the year.

- Goldman Sachs (GS: -1.9%) beat consensus on earnings and revenue driven by investment banking and equity trading, but the financial corporation's fixed income, currencies and commodities (FICC) and asset management segment results came in below forecasts.

- Fastenal (FAST: -6.8%) reported better-than-expected sales growth, but lower gross margins due to outpacing cost increases drew negative investor reaction.

This article was AI-translated and verified by a human editor