Morning in New York: the market may take a pause after the rally

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

This Friday, April 17, the market may take a breather after a multi-day rally that caught those investors who feared a more prolonged conflict in the Middle East and therefore had many defensive positions. The S&P 500 rally since early April has been fueled in large part by the recovery of the "Magnificent Seven" stocks. After hitting a low on March 30, the equal-weighted basket of these securities has fully recovered the decline, although the drawdown at one point since the beginning of the year was as high as 16%. After such a rapid rebound this group will probably need a pause for consolidation.

The news background remains mixed. US President Donald Trump has said that the war with Iran could end soon and talks between the sides could resume this coming weekend. At the same time, a ten-day ceasefire between Israel and Lebanon went into effect, which the US sees as part of a broader effort to stabilize the region. Washington's tone, however, remains tough. Trump has made it clear that if no agreement is reached, US troops will be ready to return to strikes. The issue of opening the Strait of Hormuz remains unresolved. Shipping is still restricted here. European countries are discussing practical measures to restore normal ship traffic along this route after the end of the conflict, including demining and escorting convoys. Against this background, the oil market demonstrates increased volatility and sensitivity to news, as the price dynamics is largely determined by expectations of progress in negotiations on a peaceful settlement. Any signs of a delay in the restoration of logistics can quickly change the current dynamics and put pressure on risky assets.

No significant macroeconomic publications are scheduled for today. Truist Financial (TFC), Fifth Third Bancorp (FITB), Regions Financial (RF), State Street (STT), Ally Financial (ALLY ) and Ericsson (ERIC) will present their quarterly results before the opening of the main session.

Futures on US stock indices demonstrate moderately positive dynamics. We assess the balance of risks for the upcoming session as neutral with moderate volatility. In our opinion, there are temporarily no catalysts for the rally to continue. Investors will wait for news on diplomatic ways to achieve sustainable peace with Iran, as well as the publication of reports of major companies, including Tesla (TSLA), Intel (INTC), Procter & Gamble (PG), Lam Research (LRCX), UnitedHealth (UNH), IBM (IBM), scheduled for next week. We are oriented on the S&P 500 fluctuations in the range of 7000-7080 points. Further direction of movement will be largely determined by the prospects of full opening of the Strait of Hormuz and the dynamics of oil.

- Netflix (NFLX) stock is losing 10% on the premarket after the release of its financials. Despite strong first quarter results, investors are disappointed by the conservative outlook for the next three months and the news that Reed Hastings will step down as chairman when his term expires in June.

- Blaize Holdings (BZAI) shares soared more than 26% in after-hours trading on the announcement of a contract with NeoTensr worth up to $50 million. The agreement calls for the creation of a joint data center infrastructure in the Asia-Pacific region, which will noticeably strengthen the company's commercial profile amid a small scale of revenues so far.

- NiSource (NI) shares are adding about 3% after announcing a new long-term agreement with Alphabet (GOOGL) and an expanded partnership with Amazon (AMZN). The market is positive on the company's further increased exposure to data center demand, especially as NiSource emphasizes no additional burden on incumbent customers.

- Trevi Therapeutics (TRVI) is under pressure (-7% on the premarket) after the announced placement of common shares for $150 mln. Although the company raises capital in parallel with the active development of clinical programs, the market traditionally perceives the additional issue as a factor of potential dilution of shares of current shareholders.

- Alcoa (AA) securities are declining after the publication of quarterly reports. The company fell short of expectations on revenues and profits, despite the rise in aluminum prices at the beginning of the year. The investment community remains focused on the consequences of supply disruptions and continued volatility in commodity markets.

- Shares of Knight-Swift Transportation (KNX) are down about 3% as its management sharply lowered its adjusted earnings per share guidance, citing the impact of insurance claims and weather factors that have heightened market participants' doubts about the pace of freight recovery.

April 16 trading on American stock exchanges ended in a slight plus. S&P 500 added 0.26%, Nasdaq 100 rose by 0.49%. Both benchmarks updated the historical highs, with the high-tech index closed in the positive territory for the 12th consecutive time. The Dow Jones rose 0.24%, while the Russell 2000 gained 0.22%.

Trading was relatively quiet with an unsaturated news background and no expressed anxiety about the situation in the Middle East. Investors consider the continuation of the truce in the Middle East as the base scenario, although the final normalization of the situation and restoration of full-fledged navigation through the Strait of Hormuz are expected to take time. Additional support for quotations was provided by technical factors, including the continued reduction of positions by systematic strategies, as well as continued interest in the topic of artificial intelligence.

The energy sector (XLE: +1.47%), communication services (XLC: +1.25%) and IT industry (XLK: +1.14%) were the top gainers. Outperformers were healthcare (XLV: -0.79%), industrials (XLI: -0.50%) and cyclical consumer goods (XLY: -0.47%).

The market was supported by strong macro data. The number of initial applications for unemployment benefits for the week amounted to 207 thousand with a consensus of 215 thousand, and the index of business activity from the FRB Philadelphia in April significantly exceeded expectations and reached the maximum since January 2025. At the same time, industrial production in Ma declined by 0.5% mom with forecasts for a 0.1% increase, although the February figure was revised upward.

Head of FRB of New York John Williams noted that the war with Iran contributes to the acceleration of price growth and slowdown of the economy due to increased general uncertainty, but the current monetary policy remains adequate. Overall, the tone of the regulator's comments remained mixed, but without a clear signal of the need for a quick revision of the rate trajectory.

- The FDA plans to consider granting Hims & Hers Health (HIMS: +11.1% at the close of trading on April 16) approval to manufacture a number of popular peptides that are currently restricted due to safety concerns. This reinforces expectations of regulatory relaxation and expansion of the company's product offering.

-J.B. Hunt Transport Services (JBHT: +6.3%) reported first-quarter revenue and earnings above expectations. The company reported record volumes in the intermodal transportation segment, as well as improved dynamics in the ICS division, which signals the beginning of demand recovery and possible market transition to the growth phase.

-Oracle (ORCL: +5%) announced a multi-cloud infrastructure partnership with Amazon Web Services. This will enable customers to establish direct high-speed connectivity between cloud platforms, which will improve the company's competitive position.

-Marsh (MRSH: +4.4%) reported first-quarter revenue and earnings above average forecasts, and its organic growth also exceeded overall expectations. Weak performance of the insurance division was offset by strong performance of the consulting segment.

- PepsiCo's (PEP: +2.3%) quarterly revenue and earningsbeat forecasts, and the full-year guidance was confirmed. The company reported solid demand in international markets, particularly in EMEA and APAC, while the beverage segment in North America remained more subdued.

-Charles Schwab (SCHW: -7.6%) reported first-quarter earnings growth, partially supported by tax effects. However, the corporation's net interest income came in below expectations, which outweighed the positive trend in customer activity.

- Abbott Laboratories (ABT: -6%) results for the last reported quarter beat average expectations, but its own outlook for the year was revised downward. Management noted weak performance in the specialty nutrition segment and increased competitive pressure in structural cardiac solutions.

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