US Stocks Rise, Aided By Tech Earnings, But The FRC Time Bomb Is Ticking: Analyst Says 'Sell In May' Was Wrong 9 Times In Past Decade

U.S. stocks battled against the bears throughout Wednesday's session, with help from the tech sector's noteworthy gains after encouraging earnings reports were released by industry heavyweights. 

Alphabet, Inc. GOOGL GOOG and Microsoft Corp. MSFT both announced better-than-expected results last quarter, reducing risk aversion among investors.

The better risk sentiment was further supported by stronger-than-anticipated data from March durable goods orders (3.2% against 0.7% expected). 

First Republic Bank FRC shares continue to experience extreme volatility following reports saying the government is unwilling to intervene, keeping the overall market cautious. 
Cues From Wednesday's Trading:

Wednesday's session saw major U.S. equity indices losing further ground at the open, hitting session lows around 10:30 a.m. ET and then attempting a rebound by midday on the back of strong gains in the technology sector.

The S&P 500 index was 0.3% higher and the Dow Jones Industrial Average held steady, while the Nasdaq 100 gained 1.6%. Small caps in the Russell 2000 were unchanged. 

U.S. Indices' Performance On Wednesday

Index	Performance (+/-)		Value
Nasdaq 100	+1.6%		12,920.17
S&P 500 Index	+0.3%		4,081.66
Dow Industrials	-0.02%		33,507.08

Analyst Color:

Commenting on Tuesday’s plunge, Carson Group chief market strategist Ryan Detrick said it marked the first 1%-plus drop in 22 days for the S&P 500 Index. This is the longest since a 37-day streak in Nov. 2021, he said. “Also right at the 4,200 area, as this won’t go down without a fight,” the analyst said.

First 1% plus drop in 22 trading days for the S&P 500, longest such streak since 37 days ending Nov '21.

Also right at the 4,200 area, as this won't go down without a fight. pic.twitter.com/eRbDTqxxyS

— Ryan Detrick, CMT (@RyanDetrick) April 25, 2023

The analyst also shared data to suggest the adage “sell in May and go away” may not always hold well. He noted that stocks have gained in May in nine out of the past 10 years.

The sell in May period is right around the corner.

Did you know that stocks have gained in May nine of the past 10 years?

Sell in June? pic.twitter.com/Tix6szeibh

— Ryan Detrick, CMT (@RyanDetrick) April 25, 2023

Wednesday's Trading In Major US Equity ETFs: 

In midday trading on Wednesday, the SPDR S&P 500 ETF Trust SPY was 0.2% higher to $407, the SPDR Dow Jones Industrial Average ETF DIA weakened by 0.1% to $334.9 and the Invesco QQQ Trust QQQ was 1.4% higher to $314.4, according to Benzinga Pro data.

Among U.S. equity sectors, the Technology Select Sector SPDR Fund XLK strongly outperformed, up 2.2%. The Consumer Discretionary Select Sector SPDR Fund XLY also saw marginal gains, up 0.4%, while all other S&P 500's sectors were in the red, with the Utilities Select Sector SPDR Fund XLU and the Health Care Select Sector SPDR Fund XLV undeperforming. 

Latest Economic Data:

Mortgage Bankers Association data showed that mortgage applications increased 3.7% in the week ended April 21, up from an 8.8% drop in the prior week. 

U.S. manufactured durable goods orders surged 3.2% from a month earlier, far exceeding expectations of a 0.7% surge, the U.S. Census Bureau reported.

Data from the EIA indicated that U.S. crude oil stocks declined by 5.054 million barrels in the week ending April 21, the highest reduction in a month and above the market estimate of a 1.486-million drop.

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Stocks In Focus:

First Republic Bank FRC dropped 18% following a CNBC report that the U.S. government is unwilling to intervene in rescuing the company. 

Activision Blizzard Inc. ACVI plummeted over 10%, dragged down after U.K. regulators announced they would block the videogame publisher's acquisition by Microsoft Corp, and despite the company topping Wall Street expectations. 

• PacWest Bancorp. PACW climbed over 15% after the regional bank said deposits were stabilizing.
• Microsoft rose about 8% in reaction to its stellar results, while tech peer Alphabet was flat.
• Enphase Energy, Inc. ENPH plunged over 22% following its lackluster guidance.
• Old Dominion Freight Line, Inc. ODFL fell 9.5% after reporting lower-than-forecasted results last quarter. 
• General Dynamics Corp. GD fell 4% despite topping analysts' estimates last quarter, as supply shortages in the aerospace market led the company to miss its own aircraft delivery target.
• Boeing Co. BA rose 3% after the company reported better-than-expected revenues in Q1. 
• Boston Scientific Corp. BSX, rose 1% on a Q1 earnings beat.
• Canadian-Pacific Kansas City Limited CP, KLA Corp. KLAC, Mattel, Inc. MAT, eBay, Inc. EBAY, Meta Platforms, Inc. META and Roku, Inc. ROKU are among the companies reporting after the market close.

Commodities, Bonds, Other Global Equity Markets:

Crude oil fell 0.9%, with a barrel of WTI-grade crude dropping to $76.3. The United States Oil Fund ETF USO was 0.7% lower to $67.1 per share.  

Treasury yields slightly recovered, with the 10-year yield rising by 5 basis points to 3.45% and the two-year yield up 4 basis points to 4%. The iShares 20+ Year Treasury Bond ETF TLT was 1% lower on the day. 

The dollar eased, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, down 0.4%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, rose 0.6% to 1.1037.   

European equity indices were mixed. The iShares MSCI Eurozone ETF EZU rose 0.7%. 

Gold fell 0.5% to $1,986/oz. The SPDR Gold Trust GLD was 0.6% lower to $184.8. Silver fell 0.9% to $25.75, with the iShares Silver Trust SLV falling 1% to $22.76 per share. Bitcoin BTC/USD rose nearly 6% to $29,796.

Staff writer Piero Cingari updated this report midday Wednesday. 

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Photo by Ricardo Luiz Antunes on Shutterstock.