Markets advance on suspended rate worries to focus on earnings

Dow climbed 322 (near session highs), advancers over decliners better than 3-1 & NAZ jumped 235.  The MLP index added 3 to the 278s after its recent decline & the REIT index rose 5+ to the 361s.  Junk bond funds hardly budged & Treasuries had very limited buying, taking yields slightly lower.  Oil was even in the low 79s & gold was up 6 to 2317 (more on both below).

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Just ahead of its blowout first-qtr earnings report on Apr, Alphabet (GOOG) laid off at least 200 employees from its “Core” teams, in a reorganization that will include moving some roles to India & Mexico.  The Core unit is responsible for building the technical foundation behind the company's flagship products & for protecting users' online safety.  Core teams include key technical units from information technology, its Python developer team, technical infrastructure, security foundation, app platforms, core developers & various engineering roles.  At least 50 of the positions eliminated were in engineering at the company’s offices in Sunnyvale, California, filings show.  Many Core teams will hire corresponding roles in Mexico & India.  Asim Husain, VP of Google Developer Ecosystem, announced news of the layoffs to his team in an email last week.  He told employees that this was the biggest planned reduction for his team this year, an internal document shows.  “We intend to maintain our current global footprint while also expanding in high-growth global workforce locations so that we can operate closer to our partners and developer communities,” Husain wrote in the email.  GOOG has been slashing headcount since early last year, when the company announced plans to eliminate about 12K jobs, 6% of its workforce, following a downturn in the online ad market.  Even with digital advertising rebounding recently, GOOG has continued downsizing, with layoffs across multiple organizations this year.  CGO Ruth Porat announced in mid-Apr that the finance department would undergo restructuring, entailing layoffs & moving positions to Bangalore & Mexico City.  The company's search boss, Prabhakar Raghavan, told employees at an all-hands meeting in Mar that Google plans to build teams closer to users in key markets, including India & Brazil, where labor is cheaper than in the US.  The latest cuts come as the company enjoys its fastest growth rate since early 2022, alongside improving profit margins.  Last week, GOOG reported a 15% jump in first-qtr revenue from a year earlier & announced its first-ever div & a $70B stock buyback.   GOOG stock went up 2.89. 

Google lays off hundreds of ‘Core’ employees, moves some positions to India and Mexico

Mortgage rates climbed again this week, exacerbating the home affordability crisis that is stifling the housing market.  Freddie Mac's latest Primary Mortgage Market Survey showed that the average rate on the benchmark 30-year fixed mortgage jumped to 7.22% this week from 7.17% last week. The average rate on a 30-year loan was 6.39% a year ago.  The average rate on the 15-year fixed mortgage rose to 6.47% from 6.44% last week.  One year ago, the rate on the 15-year fixed note averaged 5.76%.

Mortgage rates jump again to 7.22%

 

Moderna (MRNA) posted a narrower-than-expected loss for the first qtr as it's cost-cutting efforts took hold & sales of its Covid vaccine, its only commercially available product, topped estimates.  The results come as MRNA inches closer to putting another product on the market, which it badly needs as demand for Covid shots plunges worldwide.  The biotech company expects US approval for its vaccine against respiratory syncytial virus on May 12.  If cleared, that shot is expected to launch in the 3rd qtr.  “On the [operating expenses] side of a company, we’ve made great progress,” CEO Stéphane Bancel said of the cost cuts.”  He added that the biotech company’s team “has done a great job resizing the company.”  MRNA booked first-qtr sales of $167M, with revenue from its Covid shot dropping roughly 90% from the same period a year ago.  The company reported $1.86B in revenue in the prior-year period.  Around $100M came from the US, while $67M came from intl markets, primarily in Latin America, Moderna CFO Jamey Mock said.  The revenue decline came in part from an expected transition to a seasonal Covid vaccine market, where patients typically take their shots in the fall & winter.  MRNA posted a net loss of $3.07 per share, for the first qtr.  That compares with net income of $19¢ per share, reported for the year-ago period.  The company reiterated its full-year 2024 sales guidance of roughly $4B, which includes revenue from its RSV vaccine.  MRNA expects only $300M of those sales to come in during the first ½ of the year since the season for respiratory viruses is typically in the latter ½ of the year.  The 2nd qtr will include a portion of the company's recently announced contract with Brazil to supply 12.5M Covid vaccine.  MRNA has said it expects to return to sales growth in 2025 & to break even by 2026, with the launch of new products.  For the first qtr, Mock said the company is “more encouraged by what we’re seeing from a productivity perspective” than the higher sales of its Covid vaccine.  The stock jumped 14.13 (12%).

Moderna loses less than expected as Covid vaccine sales beat, cost cuts take hold

Gold prices were steady early today as the $ & yields eased after the Federal Reserve's day-prior decision to stand pat on interest rates, while US productivity growth rose less than expected in the first qtr.  Gold for Jun was last seen up $1 to $2312.  The price of the metal is sticking above the $2300 mark following a correction that followed a rise last month to a record 2413.80 on Apr 19.  The Federal Reserve's policy committee ended its 2-day meeting yesterday with interest-rates unchanged.  Fed chair Jerome Powell offered investors some comfort by saying the central bank's next move is unlikely to be a rate hike even as inflation remains stubbornly above the 2% target but hopes rate cuts are on the way further dimmed.  The $ weakened, giving up early gains as US reported productivity rose by just 0.3% in the first qtr, under expectations for a 0.5% rise & below the 3.2% rise in the 4th-qtr of 2023.  The ICE dollar index was last seen down 0.15 points to 105.61.  Treasury yields edged down, with the 2-year note was last seen paying 4.948%, down 2.0 basis points, while the yield on the 10-year note was down 0.3 basis points to 4.636%.

Gold Steady as the Dollar and Yields Ease Following Fed Decision and Slowing US Productivity

West Texas Intermediate (WTI) crude oil edged down, following on a day-prior 3.6% drop to the lowest since mid-Mar on an unexpected rise in US inventories that showed weaker than expected demand.  West Texas Intermediate crude oil for Jun closed down a nickel to settle at $78.95 per barrel & Jul Brent crude, the global benchmark was last seen down up 15¢ to $83.99.  Prices fell to the lowest since Mar 12 after the Energy Information Administration reported US oil inventories rose by 7.3M barrels last week, while the estimate called for a small drop in stocks.  Also, gasoline inventories rose on weak demand for the fuel.  Worries were easing over spreading Middle East violence as ceasefire talks between Israel & Hamas continue in Egypt with a report that Israel's war cabinet will meet this evening to consider a ceasefire deal in return for the release of hostages held by Hamas.

WTI Crude Oil Falls for a Second Day; Closes with a Small Loss

There is a sense of calm in the stock market after yesterday's FOMC meeting.  But the US is still struggling to some degree as high interest rates & inflation linger on.  At a minimum, they have a negative impact on GDP growth.

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