Here's What's Happening in Markets: April 16
Markets were wobbling Tuesday as investors continued to digest corporate earnings, hoping to snap a losing streak in the Dow.
SPY, the SPDR S&P 500 ETF Trust, was flat as the S&P 500 moved in and out of the red. The Dow remains the leader on the day, boosted by beats on both the top and bottom lines by UnitedHealth Group Inc. DIA, the SPDR Dow Jones Industrial Average ETF Trust was up roughly a third of a percentage point. The Nasdaq also teetered Tuesday, remaining flat on the day. QQQ, the tech-heavy Invesco QQQ Trust mirrored the index, struggling to stay in the green.
Bank of America Corp. reported earlier today that profit dropped more than 18% from the same quarter last year. The dip highlighted the challenges banks are finding in the higher interest rate environment. While higher rates typically boost profit margins for financial firms, they also erode margins on consumer accounts.
XLF, the Financial Select Sector SPDR Fund dropped more than a quarter of a percentage point as investors digested the impact of rates on the financial sector. Despite the recent dip in financials, the sector has been resilient so far this year, jumping close to 7% since the start of the year.
XLF 3-Month Total Return
Source: etf.com
According to etf.com data, XLF is one of the most active ETFs Tuesday, with a total trading volume around 29 million at 1 p.m.
Corporate earnings will continue to be a market driver for the next few weeks as investors look for clarity about the strength of the U.S. economy amid anxieties about the Federal Reserve and the future path of rate cuts. According to FactSet, roughly 6% of the S&P 500 has reported earnings so far, with 83% delivering a beat on earnings and more than half reporting upside surprises on revenue.
For investors hoping for an interest rate boost in their portfolios, they will have to look abroad. European Central Bank head Christine LaGarde told CNBC that the bank would "moderate its restrictive monetary policy" if inflation continued to move as expected.
VGK, the Vanguard FTSE Europe ETF which represents the largest European exposure for investors was in the red Tuesday.
Here at home, markets are forecasting a 99.5% chance the Fed will hold rates steady at its June policy meeting according to the CME Fed Watch Tool. Traders aren't anticipating rate cuts until September.