The Tribune

By CHRIS ILLING

CCO @ ActivTrades Corp

LAST week was a week for mixed emotions on Wall Street. The first three days of the week had been rather weak, and the major stock indices were all losing ground. But on Thursday, the Facebook group, Meta, triggered a rally on the Nasdaq stock exchange with a strong quarterly report. The earnings report from several technology companies were released last week, and investors turned their attention away from recent bank earnings and other stories. The continued strength in major US technology stocks this week is undoubtedly a relief for investors. Only the price losses at the online giant, Amazon, and uncertainty before the Federal Reserve’s interest rate decision this week slowed the US stock exchanges on Friday.

The lack of clarity about the future course of the Fed, with its interest rate decision set to come in the middle of the week on Wednesday, is causing nervousness. According to strategists, key interest rates are likely to be raised again by 25 basis points in the fight against inflation. Meanwhile, US consumer spending was flat in March, while underlying inflationary pressures remained strong. Across the pond in Germany, the inflation rate fell to its lowest level in eight months. On average, consumer prices were 7.2 percent above the level of the same month last year, which is the lowest value since August 2022.

The good earnings report was led by Exxon, which recorded another record first quarter profit that was doubled from one year ago. Shares were up over 2 percent on Friday. Another notable report came from Sony, which reported record operating revenues for the company. The strong demand for its new Playstation 5 helped fuel this 35 percent rise year-over-year. Some 19.5m Playstations were sold worldwide. Microsoft had a fantastic week, and its shares gained over 8 percent after the company exceeded analysts’ expectations and reported revenues of $52.86bn. The company intends to continue investing in its cloud infrastructure and, in particular, all areas of artificial intelligence (AI).

Besides good news in the technology world, the airline industry was able to show a good performance, and the shares of American Airlines rose by more than 4 percent last Friday when the company posted an unexpected profit for the 2023 first quarter. The company also raised its per-share earnings for the second quarter. Despite a first quarter loss for Jet Blue, the airline beat the market’s estimates and the stock gained 2 percent on the last trading day of the week thanks to expectations of a profitable second quarter.

Those mixed results across the board are a sign of uncertain times ahead. A tighter monetary policy in the US, as well as Europe, will have a further impact on investments and consumer consumption. This should result in little or no economic growth and a strong risk of a recession.