U.S. Stocks closed with solid gains on Friday, 28th April 2023, ending the month of April slightly higher after earnings from mega caps, Microsoft, Alphabet, and Meta were received positively by investors.  

However, Amazon fell 4% after warning growth in its cloud computing services would slow further despite better-than-expected results. 

Friday’s earnings release included Exxon Mobil Corp and Intel, both beat estimates and closed up 1.3% and 4% respectively. 

Meanwhile, the U.S. employment cost index, the broadest measure of U.S. labor cost and closely watched by the Fed, rose 1.2% in the first quarter after gaining 1.1% in the fourth quarter of 2022. The Fed is most likely to rate interest rates by another 25 basis points next week. 

The 10-year yield fell 10 basis points to 3.43%, while the 2-year yield dropped 6 basis points to 4.03%. 

The Dow Jones average gained 0.9% for the week and 2.5% for the month of April, while the S&P 500 rose 0.8% for the week and 1.5% for the month, and the Nasdaq added 1.3% for the week and ended the month nearly unchanged. 

Here are the closing levels on Friday, 28^th April 2023:

	Last	Change	Change%
Dow Jones	34,098.16	+272.00.	+0.80%
S&P 500	4,169.48	+34.13.	+0.83%
S&P 500	12,226.58	+84.34.	+0.69%
U.S. 10Y	3.42%
VIX	15.78	-1.25	-7.34%

The “buy the dips” strategy is still working. 

Helped by better-than-expected earnings from mega caps, investors are willing to fight the Fed and go long this market. 

While, there is little doubt that the Fed will raise rates next week, with inflation still running hot, there is now a small chance that there could be one more rate hike after that. However, there is less chance for a rate cut in the 3^rd quarter and maybe even for the year. 

All this means nothing to investors as the strength of the consumer continues to defy higher interest rates. That is what the latest data is telling us. 

Can we continue to rally higher with “higher for longer”?  

Company results are saying it is possible. 

Waiting to see the effects of the higher rate policy by the Feds have only caused pain to sellers/shorts as buying on dips and FOMO win the tug of war. 

However, there is a possibility of a pullback next week if the Fed raises rates and comes out with hawkish statements. In that case, buyers may enter the market to take advantage of the dip.

This commentary is written by James Gomes.
James has been in the finance industry for over 30 years and most recently worked for a large U.S. bank for more than 20 years.

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