U.S. stock markets closed mixed on Monday to start the last week of April. Market participants are waiting for a big week as several corporate behemoths will declare earnings results. Moreover, various key economic data will be released this week. The Dow and the S&P 500 ended in positive territory while the Nasdaq Composite finished in negative zone.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) rose 0.2% to close at 33,875.40. The blue-chip index posted a two-day winning streak. Notably, 18 components of the 30-stock index ended in positive territory and 12 in negative zone.

The tech-heavy Nasdaq Composite finished at 12,037.20, sliding 0.3% due to weak performance of large-cap technology stocks. The major loser of the tech-laden index was PDD Holdings Inc. (PDD Quick QuotePDD - Free Report) . The share of the e-commerce operator tumbled 3.6%. PDD Holdings currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The S&P 500 advanced 0.1% to end at 4,137.04, recording a two-day winning streak. Six out of 11 broad sectors of the benchmark index closed in positive territory while five in red. The Energy Select Sector SPDR (XLE) increased 1.5% while the Technology Select Sector SPDR (XLK) dropped 0.4%.

The fear-gauge CBOE Volatility Index (VIX) was up 0.7% to 16.89. A total of 9.54 billion shares were traded on Monday, lower than the last 20-session average of 10.3 billion. Advancers outnumbered decliners on the NYSE by a 1.32-to-1 ratio. On Nasdaq, a 1.41-to-1 ratio favored declining issues.

Wall Street Remains Rangebound

U.S. stock markets have witnessed rangebound trading in April after concluding a solid first-quarter 2023. Investors seem confused about the movements of the market. The primary reason is that the U.S. economy is currently facing a dichotomy.

Several measures of inflation continued to decline in March but remained above the Fed’s 2% target. The resilient labor market has shown cracks. The hourly wage rate increased 4.2% year over year in March, reflecting its lowest monthly gain since June 2021. A series of weak economic data for the last two months clearly indicated that Fed’s rate hike started delivering the desired results.

On the other hand, a section of market participants and financial researchers are concerned that a probable recession later this year will hurt Wall Street to a large extent. A sharp drop in consumer spending, especially in retail sales, a devastated housing sector, contracting manufacturing data, soft services data and the recent weakness in the resilient labor market might lead to a recession in the near-term.

Better-Than-Expected Start to Q1 Earnings

As of Apr 24, 90 companies on the S&P 500 Index have reported their quarterly financial numbers. Total earnings of these companies are down 1.9% year over year on 7.1% higher revenues. Further, 77.8% of companies have surpassed earnings estimates while 66.7% have beaten revenue estimates.

Our projection has shown that total earnings of the S&P 500 Index are set to decline 8.3% year over year on 2.2% higher revenues compared with a 10% year-over-year decline in earnings on 1.7% higher revenues, estimated at the beginning of the reporting cycle. This will follow a 5.4% year-over-year decline in earnings of the S&P 500 Index on 5.9% higher revenues in fourth-quarter 2022.

This earnings season is likely to witness the fifth consecutive quarter of a year-over-year decline in net margins of the S&P 500 Index. The aggregate net margin is likely to decline 1.47% in the first quarter. If this happens, it will mark the biggest quarterly decline since the 1.38% year-over-year net margin decline in fourth-quarter 2022.