Stock Market News for May 4, 2022

Wall Street closed higher on Tuesday after a volatile session. U.S. stocks rose as market participants opted for buy on the dip strategy despite remained concerned about Fed’s ongoing FOMC policy decisions. All three major stock indexes ended in green.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) advanced 0.2% to close at 33,128.79. Notably, 19 components of the 30-stock index ended in positive territory while 11 in red. The tech-heavy Nasdaq Composite finished at 12,563.76, rising 0.2% due to the strong performance of large-cap technology stocks.

Meanwhile, the S&P 500 gained 0.5% to end at 4,175.48. Nine out of 11 broad sectors of the benchmark index closed in positive zone while two in red. The Energy Select Sector SPDR (XLE), the Financials Select Sector SPDR (XLF), the Materials Select Sector SPDR (XLB) and the Real Estate Select Sector SPDR (XLRE) rallied 2.8%, 1.3%, 1.1% and 1.2%, respectively.

The fear-gauge CBOE Volatility Index (VIX) was down 9.6% to 29.25. A total of 11.35 billion shares were traded Tuesday, lower than the last 20-session average of 11.88 billion. Advancers outnumbered decliners on the NYSE by a 1.92-to-1 ratio. On Nasdaq, a 1.26-to-1 ratio favored advancing issues.

All Eyes on Powell’s Post-FOMC Statement

The Fed has started a very important FOMC Meeting scheduled for May 3-4. Market participants across the world are eagerly waiting for the outcome of this meeting. Economists and financial experts are by and large expecting the central bank to raise the benchmark interest rate by 50 basis points after raising the Fed fund rate by 25 basis points in March.

However, investors will closely monitor the post-FOMC statement of the Fed Chairman Jerome Powell and his answer in press conference to gauge whether the aggressive rate hike policy will be a single dose affair or it will just open the gate of more aggressive rate hikes in 2022. At the same time, market participants would like to hear Fed’s decision regarding shrinking the size of its $9 trillion balance sheet.

Several measures of U.S. inflation are currently at their 40-year highs. Fed has decided to take harsher measures in order to combat soaring inflation. However, a large section of economists and market experts have warned that too much tougher stand may result in economic contraction that will lead to a recession in the U.S. economy in the near future. Notably, the U.S. economy has contracted by 1.4% year over year in first-quarter 2022.

Solid First Quarter Earnings Results

The first-quarter 2022 earnings season is currently in its middle. Earnings results are better-then-expected so far.

The Clorox Co. CLX reported third-quarter fiscal 2022 results. Adjusted earnings of $1.31 per share but surpassed the Zacks Consensus Estimate of $0.97. The company posted net sales of $1,809 million, beating the Zacks Consensus Estimate of $1,808 million.

Diamondback Energy Inc. FANG reported first-quarter 2022 adjusted earnings per share of $5.20, beating the Zacks Consensus Estimate of $4.74. Revenues of $2.41 billion outpaced the Zacks Consensus Estimate by approximately 25%.

Consequently, shares of Clorox and Diamondback Energy rallied 3% and 6.8%, respectively. Diamondback Energy sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Economic Data

The Department of Commerce reported that factory orders increased 2.2% in March compared with the consensus estimate of 1.2%. February’s data was revised upward from a decline of 0.5% to a gain of 0.1%. The data for February and March signaled strong demand for goods despite soaring prices and supply constraints. In March, orders for non-defense capital goods, excluding aircraft, which constitute the business spending plans on equipment, rebounded 1.3%.

The Department of Labor reported that job openings hit a record high of 11.55 million in March, marking the highest since the inception of this data series in December 2000. The data for March was 205,000 higher than February. Total job quits reached to 4.54 million, up 152,000 from February.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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