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U.S. equities managed to snap their slide Wednesday as the first-quarter earnings season got off to a decent start.

Delta Air Lines (DAL, +6.2%) was one of the sharpest gainers in the S&P 500 after the airline posted both strong Q1 results and delivered a cheerful Q2 forecast. DAL’s $9.35 billion in revenue topped expectations for $8.92 billion, while its net loss of $1.23 per share was under the $1.27 analysts were looking for. On top of that, Delta says second-quarter revenues will recover to just 3% to 7% below the pre-pandemic levels of Q2 2019 thanks to expectations of a robust travel season.

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CEO Ed Bastian told CNBC today that Americans are “done investing in their homes and their garden and want to go see someone else’s garden for a change.”

The positive reaction to Delta Air Lines’ earnings report gave a lift to fellow airline stocks. American Airlines Group (AAL) spiked 10.6%, while Southwest Airlines (LUV, +7.5%) and United Airlines (UAL, +5.6%) also finished the day solidly higher.

Fastenal (FAST, +2.2%) shares improved as well after reporting a profit of 47 cents per share on sales of $1.7 billion, both of which beat the Street’s views.

Meanwhile, BlackRock (BLK, -0.2%), was roughly breakeven after it announced Q1 revenues of $4.7 billion that slightly missed the mark, but also better-than-expected adjusted earnings of $9.52 per share thanks to lower expenses.

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Struggling a bit more was JPMorgan Chase (JPM, -3.2%), which struck a sour note despite topping expectations. Profits of $2.76 per share on $31.59 billion in revenues were better than respective estimates of $2.69 per share and $30.86 billion, but also represented 42% and 5% year-over-year declines, respectively. Among the items weighing on JPM was a $524 million charge tied to market turbulence amid Russia’s invasion of Ukraine.

“The financial sector in general is under pressure over the past few weeks, and banks are almost at the bottom of the list,” says Julius de Kempenaer, senior technical analyst at charting platform StockCharts.com. “One would think that the recent rise in interest rates would, to a degree, help banks, but the weak earnings report from JPM this morning suggests otherwise. Apparently the impact of rising inflation and geopolitical influences is more than offsetting the benefits from rising rates.”

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Advances in the consumer discretionary (+2.5%) and communication services (+1.5%) sectors put the Nasdaq Composite (+2.0% to 13,643) ahead of the other major indices. The S&P 500 closed 1.1% higher to 4,446, while the Dow Jones Industrial Average climbed 1.0% to 34,564.

The earnings calendar will continue Thursday, but Steve Sears, president of asset management firm Options Solutions, says that’s not the only thing worth watching.

“April options expire on Thursday since the markets are closed on Friday,” he says. “Options expirations have historically been mostly immaterial to the stock market, but don’t tell that to investors. The growth in options trading during the COVID-19 pandemic has made options expirations as closely watched as the release of economic and inflation data.”

YCharts

Other news in the stock market today:

• The small-cap Russell 2000 jumped back above 2,000, gaining 1.9% to 2,025.
• U.S. crude oil futures jumped 3.6% to finish at $104.25 per barrel.
• Gold futures rose for a fifth straight day, gaining 0.4% to settle at $1,984.70 an ounce.
• Bitcoin stormed back from a recent slump, advancing 4.5% to $41,075.10. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.
• Charles Schwab (SCHW) rose 4.7% after Morgan Stanley analyst Mike Cyprys elevated the financial stock to a “top pick” position. Shares are at a compelling entry point right now and SCHW should “see upward estimate revisions and greater investor appeal” as it benefits from the Federal Reserve’s rate-hiking cycle and rising yields. Not only is SCHW a top pick at Morgan Stanley, but it’s also one of Kiplinger’s best stocks to buy for 2022.
• Walmart (WMT, +2.6%) said it has hired John Rainey to replace outgoing Chief Financial Officer Brett Biggs. Rainey, who currently serves as chief financial officer at PayPal (PYPL, -2.9%), will take over the reins on June 6.

What’s the Top Dow Stock Right Now?

Where should investors be positioned as the Q1 earnings season gets underway?

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Chris Haverland, global equity strategist for the Wells Fargo Investment Institute, notes that “earnings growth is expected to be concentrated in several cyclical sectors. The energy, industrials and materials sectors should lead the way, with energy earnings expected to grow by an eye-popping 255%.” 

However, it’s possible that much of that backward-looking growth is priced into the sector right now – “forward guidance will be key as many companies continue to deal with rising input costs, a tight labor market, and continued global supply-chain constraints,” Haverland adds. 

More broadly speaking, however, Haverland is “most favorable” on higher-quality U.S. large-cap equities at the moment. Those wanting to follow that guidance would be hard-pressed to find much higher-quality companies than the blue chips of the Dow Jones Industrial Average – though even within the ranks of these 30 large- and mega-cap stocks, some investments look vastly superior compared to others. 

Today, we’ve taken a fresh look at all 30 Dow Jones Industrial Average components, ranked based on the consensus analyst opinions of the dozens of pros covering each name.

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