Stock Market News: Key inflation data, oil earnings, Fed's SVB report

Wall Street’s main indexes opened lower on Friday after Amazon warned about a slowdown in its cloud business, while strong inflation data cemented bets that the Federal Reserve will hike interest rates again next week.

The Dow Jones Industrial Average fell 28.73 points, or 0.08%, at the open to 33,797.43. The S&P 500 opened lower by 5.72 points, or 0.14%, at 4,129.63, while the Nasdaq Composite dropped 24.69 points, or 0.20%, to 12,117.54 at the opening bell.

Shares of First Republic gained 11% in premarket trading on Friday after a report that U.S. officials are coordinating urgent talks to rescue the regional lender as private-sector efforts led by the bank’s advisers have yet to reach a deal.

The government’s involvement is helping bring more parties, including banks and private equity firms, to the negotiating table, one of the sources told Reuters.

Wall Street banks have been trying to find a solution for the beleaguered lender following last month’s collapse of two regional lenders that prompted some of the biggest U.S. banks to deposit $30 billion at First Republic.

“The potential worst-case scenario stemming from the collapse of Silicon Valley Bank appears to have been averted,” said Mark Haefele, chief investment officer at UBS Global Wealth Management in a note.

Exxon Mobil Corp on Friday reported a record first-quarter profit that was more than double a year ago and topped Wall Street estimates as rising oil and gas output overcame a pullback in energy prices from high levels.

“We delivered a first-quarter record despite the fact that energy prices and refining margins are softening a bit,” Chief Financial Officer Kathryn Mikells said in an interview.

The biggest contributor to the better-than-expected earnings came from strong production growth, she said. Exxon’s quarter was driven by new volumes of crude oil and fuels from the startup of new offshore developments and refining facilities.

Net profit rose to $11.43 billion, or $2.79 per share, compared to $5.48 billion a year ago that included a $3.4 billion after-tax writedown to exit Russia. Results beat consensus by 9%, according to REFINITIV data.

U.S. consumer spending was unchanged in March, while underlying inflation pressures remained strong, which could see the Federal Reserve raising interest rates again next month.

The unchanged reading in consumer spending last month, reported by the Commerce Department on Friday, followed a downwardly revised 0.1% gain in February. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, was previously reported to have increased 0.2% in February. Economists polled by Reuters had forecast consumer spending dipping 0.1%.

The data was included in the advance gross domestic product report for the first quarter published on Thursday, which showed consumer spending surging at a 3.7% annualized rate that period after rising at a 1.0% pace in the October-December quarter.

The overall economy grew at a 1.1% pace as the acceleration in consumer spending was offset by businesses liquidating inventories in anticipation of weaker demand later this year. The economy expanded at a 2.6% rate in the fourth quarter.

Intel Corp shares rose nearly 6% as the once-dominant chipmaker’s quarterly print indicated “baby step progress” in efforts to turn around its business after ceding market share to rivals and struggling with all-time low margins.

At least 13 brokerages raised their target price on the stock that has underperformed rivals this year, encouraged by CEO Pat Gelsinger’s remarks the PC market – on which Intel built its reputation – was stabilizing after multiple quarters of decline.

“While the future pace of the sector’s recovery is uncertain, we do believe that Intel has reached a revenue, gross margin, and profit trough through this first half of 2023,” said Benchmark analyst Cody Acree, upgrading the stock to “buy”.

Intel on Thursday projected adjusted gross margins will climb above 40% in the second half, and said it had ramped up shipments of a key data center chip after a more than one-year-long delay had allowed rivals to take its market share.