Stocks were mixed for the shortened week, with only the Russell 2000 notching a gain for the week.
Earnings season kicked off this week. While the number of earnings reports will ramp up in the coming weeks, the largest banks reported en masse this week, while, Delta Air Lines (DAL) and American Airlines (AAL) set a high bar for airline reports to come.
Twitter (TWTR) made the headlines pretty much every day this week as the company’s Elon Musk-saga continues. This week began with Musk declining the board seat and ended with Musk making a $43 billion offer to acquire Twitter, which would be $54 per share. Since market-open Monday, Twitter’s stock has surged 27.36% to $46.34 per share.
Inflation Reports
This week had two key inflation reports, the Producer Price Index and the Consumer Price Index.
Consumer prices rose the expected 1.2% in March, while core consumer prices rose less than expected with a 0.3% rise.
Meanwhile, both the core and headline figures exceeded expectations on the producer side. Producer prices rose 1.4% in March and, less food and energy, rose 1%.
Retail Sales
The headline retail sales figure missed the mark for March, rising 0.5% as retail sales slowed from February’s 0.8% rise. Meanwhile, excluding autos, retail sales rose 1.1% and exceeded expectations as sales growth hastened from a 0.6% rise in February.
The big takeaway from this report was, that, excluding gasoline sales, spending fell 0.3% in March. This suggests that prices at the pump are chipping away at consumers’ ability to spend on other goods and services.
Banks
Bank earnings got kicked off this week in an alarming fashion with a JPMorgan Chase (JPM) earnings miss.
JPMorgan sent bank stocks lower Wednesday after the company’s earnings came with a glaring $524 million loss related to fallout from sanctions on Russia.
Subsequent bank earnings didn’t come with quite the surprises held by JPMorgan and most beat expectations. Despite beating expectations, the results are downbeat in comparison to year-ago figures as analysts expect a 37% dip in bank revenues, according to FactSet, as banks struggle with base-effect due to overlapping with plump 2021 earnings.
Airlines
Airlines had a great weak, rising 1.29% as a whole on Friday and 6.58% over the last 5-days.
Getting the ball rolling for the industry Monday morning was American Airlines (AAL), which raised its guidance for the second time in less than a month. American expects to get back to profitability in 2022, following two years of losses, as - for the time being - higher fare costs are being successfully passed along to consumers without hampering demand for seats.
The following day, Delta Air Lines (DAL) soared on strong earnings and better-than-expected revenue, which included a bullish outlook for the rest of 2022. This report showed a 70% return to business air travel and included guidance for improving operating margins to a range of 12%-14%.
American’s strong re-raise to its guidance and Delta’s strong report underscored a strong recovery in air travel as robust demand was unaffected by rising fare costs.
All told, the S&P 500 fell 2.13% and the Nasdaq fell 2.63%. Meanwhile, the Russell 2000 rose 0.60% and the Dow edged lower by 0.78%.
