Earning reports will dominate the stock moves this week after US inflation hit a 41-year high in March. Meanwhile, China’s better-than-expected GDP figure offers limited support to sentiment as the market continues to monitor the lockdown impacts in some of the major cities of China.

Bank of America reports quarterly results Monday before the bell. Several Dow blue-chip names report earnings this week, including IBM, Procter and Gamble, Travelers, Dow Inc, Johnson and Johnson, American Express and Verizon.

Technology bellwethers are also set to report quarterly earnings, with Netflix due on Tuesday and Tesla out on Wednesday. Snap reports Thursday. United Airlines, American Airlines and Alaska Air are also on the calendar, as well as railroads CSX and Union Pacific.

Investors will be paying close attention to forwarding guidance, especially for comments on how companies are handling surging costs. March’s Consumer Price Index reading released last week showed an 8.5% increase from a year ago, the fastest annual gain since December 1981.

Earnings season is off to a decent start with 77% of S&P 500 companies reporting earnings per share above expectations. 7% of the S&P 500 companies have reported results so far. Analysts believe first-quarter earnings will jump 5% for the quarter when all S&P 500 companies finish reporting.

2022 EPS (earnings per share) is likely to come down a bit through earnings season, but likely less than we would have thought a month ago. And, the more US-centric and more services-centric the company, the better the EPS outlook is likely to be. Despite some better-than-expected results, investors sold stocks last week as they feared higher rates and inflation could darken the outlook for earnings.

The S&P 500 fell 2.13% for its second negative week in a row. The Nasdaq Composite lost 2.63%, and the Dow fell 0.8% in the period. The 10-year Treasury yield last week touched the highest level in three years above 2.83%, which is weighing on stocks.

China GDP

China’s first-quarter GDP grew faster than expected, despite the impact of Covid lockdowns in parts of the country in March, according to data released by the National Bureau of Statistics Monday.

First-quarter GDP rose by 4.8%, topping expectations of a 4.4% increase from a year ago. Fixed asset investment for the first quarter rose by 9.3% from a year ago, topping expectations for 8.5% growth. Industrial production in March rose by 5%, beating the forecast for 4.5% growth.

However, retail sales in March fell by a more-than-expected 3.5% from a year earlier, while analysts polled by Reuters anticipated a 1.6% decline.

Beginning in March, the country has struggled to contain its worst Covid outbreak since the initial phase of the pandemic in 2020. Back then, lockdowns across more than half the country resulted in a 6.8% contraction in first-quarter growth from a year earlier.

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