Wall Street closed mixed on Friday, but still managed to notch another weekly gain. The S&P 500 eked out a small gain of less than 0.1%, extending its winning streak to eight weeks out of the past ten. The Dow Jones Industrial Average edged up by only 2 points, while the Nasdaq Composite slipped by 0.2% after experiencing its worst loss in over four months the previous day.
Despite the mixed performance of the overall market, there were individual stocks that stood out. Roper Technologies, for instance, rallied 3.8% after reporting better-than-expected profit and revenue for the spring season. The company, which specializes in niche tech markets, also raised its full-year financial forecasts. On the other hand, American Express saw a sharp drop of 3.7% as its revenue fell short of expectations, even though it reported stronger profit for the spring.
The earnings reporting season is gaining momentum, and the majority of companies have been posting better results than anticipated. However, the margin of outperformance has been slightly lower than usual, according to FactSet.
Looking ahead, investors are eagerly awaiting the Federal Reserve’s decision on interest rates, which is expected to result in another rate hike. The hope is that this hike will be the last of the cycle, as inflation has been cooling since last summer. The stock market has remained resilient throughout the year, defying recession predictions and pushing through higher interest rates.
However, some critics argue that the rally may have gone too far too quickly. The S&P 500 has surged more than 18% this year, prompting concerns about a potential recession due to high inflation and interest rates.
Next week will be filled with key earnings reports from some of the market’s top performers. Expectations are high for Alphabet, Meta Platforms, and Microsoft, as all three have seen significant gains of over 35% so far this year. Meanwhile, Tesla experienced a sharp decline despite reporting stronger-than-expected profit and revenue, raising concerns about its future growth potential.
In order to reduce the influence of the market’s top stocks, Nasdaq will be rebalancing its Nasdaq 100 index before trading begins on Monday. The rebalancing aims to address the fact that the Magnificent Seven stocks (Amazon, Apple, Nvidia, and others) are currently trading at 44 times higher stock prices compared to their earnings per share over the past 12 months. In contrast, the rest of the S&P 500 stocks are trading at a more reasonable 17 times earnings.
In international markets, stocks saw mixed performance in both Europe and Asia. Taiwan’s Taiex index fell by 0.8% after TSMC, the world’s largest computer chip manufacturer, announced an expected 10% decline in sales for this year due to weakening demand. TSMC also revealed that it would not meet its 2024 target for starting production at a factory under construction in Arizona.
Overall, Wall Street closed with a mixed performance, signaling some stability after the previous day’s decline. While individual stocks experienced notable gains and losses, the market as a whole continues to show resilience and post gains amidst economic uncertainty. Investors will closely monitor the upcoming earnings reports and the Federal Reserve’s decision on interest rates for further insights into the market’s trajectory.
Disclaimer: This article is for informational purposes only and should not be construed as financial advice.
