Can Positive finish Last Week Influence By Labor Data Spill Over to This Week?

The stock market finished the week positively, with the S&P 500 (SPX) rising by 1.3% to nearly touch its 50-day moving average at 5,129 points, while the Nasdaq Composite (COMPX) saw a 2.0% increase. The Russell 2000 (RUT) also climbed by 1.0%, bringing its year-to-date gain to 0.4%.

We saw Crude oil drop by 1.22% and VIX was down by 8.11%. Gold has a small increase of 0.02%. Will we see similar performance this week?

We have the April employment report (labor data) release on Friday, the data has showed weaker-than-expected job growth. We saw market sentiment influenced because this has removed some of the fears of an imminent rate hike without raising concerns about overall labor market health.

Here is a summary of what the key figures looks like :

Market sentiment was influenced by the April employment report, which showed weaker-than-expected job growth. This tempered fears of an imminent rate hike without raising concerns about overall labor market health. Key figures included:

Nonfarm payrolls at 175,000 versus the expected 250,000

Average hourly earnings increase of 0.2%, below the anticipated 0.3%

Unemployment rate rose to 3.9%, against a forecast of 3.8%

Average workweek hours at 34.3, slightly less than the 34.4 expected

The stock performance was also boosted by the declining treasury yields, this is an important role now that we need to take note (at least I personally think so).

The yield on the 10-year note dropped by seven basis points to 4.50%, and the 2-year note yield decreased by seven basis points to 4.81%.

We saw significant stock movement after Apple announced better-than-expected quarterly results and a $110 billion share repurchase program, their share price surge 6%. (Will it continue to do it this week?).

The next stock to also stand out is Amgen which provided a 11.8% gain following positive earnings and a successful trial update for its drug MariTide.

But we also have some losers who has experience significant decline after their earnings announcements, Expedia, Fortinet, Ingersoll-Rand, and DaVita all suffered losses.

We saw the information technology sector lead by 3.01%, followed by communication services at 1.03%, materials came in at 1%. Only Energy sector was the S&P 500 sector that went negative at -0.05%.

I believe we should be seeing similar S&P 500 sector performance this week.

We also have other economic data released which might raise concerns about inflation pressures despite overall economic growth. April S&P Global US Services PMI and ISM Non-Manufacturing PMI, which indicated a slight contraction in service sector activity.

Apple announced a historic $110 billion share buyback, the largest in U.S. history, sending its shares up significantly. This move came after the tech giant reported better-than-expected quarterly results, particularly noting strong performance in China and an overall robust financial health.

Over the weekend we have heard the comment by Buffet on Berkshire's decision to trim its stake in Apple (AAPL 5.98%) during the first quarter. Berkshire sold over 116 million shares of Apple in Q1, reducing its position by around 12.9%. It marks the company's largest sale of Apple stock since it began purchasing shares in 2016 -- far larger than the 10 million or so shares Berkshire sold in Q4.

Despite that, Buffett addressed the sale in the Q&A session, he has mentioned that they will keep Apple as our largest investment, unless something dramatic happens that really changes capital allocation and strategy, This would mean that Berkshire will still build cash position, but whether they will be looking at other stock in the equity market, Apple still is their number 1 holdings.

This could boost the confidence of investors when trading start on Monday (06 May), but there is something that we need to understand on the federal rate on capital gains, which Buffett said is 21% compared to 35% not long ago and even as high as 52% in the past.

This is because if the tax rate were to go up based on Fed fiscal policies, the reason why Buffett and team decided to book the gains on Apple stock first, because of worry of a potentially higher tax rate in the future. If we look back at Fed Chair Powell comment at the FOMC, the rate hike might not be possible, so I believe this concern might not need to worry so much.

If we look at the demand, it is not actually rising a lot, despite seeing a strong price upside, this could be due to the buyback effect, so I would suggest that we continue to monitor Apple and see what is the confidence level market have for Apple’s stock buyback?

Palantir Technologies is set to report its Q1 earnings with expectations of increased revenue and earnings per share, amid significant interest in its AI capabilities. The firm's performance remains a critical watch, especially given its substantial stock price increase over the past year.

Palantir has shown a declining wedge and it has managed to do a reversal once the demand increases, and we have a nice MACD crossover. But we need to understand that investors would be looking out on how Palantir AIP has actually helped its earnings for this upcoming report.

Block delivered a robust Q1 report with revenues and earnings exceeding expectations, supported by diverse revenue streams from its various payment platforms. The fintech giant's forward-looking statements suggest continued growth, reassuring investors about its market position.

We are not seeing investors sentiment and interest gaining despite the robust Q1 earnings by Block, and this might be because of the worries of inflation pressures despite overall economic growth.

As seen in the chart below, we could see that Block need to have an MACD crossover in order to show a bullish reversal.

I would think market could continue the positive finish last week, as the weaker-than-expected job growth suggest that market fears of an imminent rate hike is lowered.

We could see some confidence coming back from Traders and Investors into this new week of trading.

Appreciate if you could share your thoughts in the comment section whether you think S&P 500 could close in the higher green positive this week?

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.