This Friday was a day of triumph for the stock markets as the latest slew of robust earnings reports and a stable July jobs report inspired a surge of investor confidence. This buoyant mood led to a retraction of yields from their recent highs, adding to the positive outlook.
The illustrious Dow Jones Industrial Average climbed by an impressive 194 points (0.55%), while the S&P 500 and the Nasdaq Composite each ascended by over 0.4%, reflecting the upbeat investor sentiment. This optimism was largely driven by a wave of encouraging earnings reports, with Amazon shining brightest of all. The e-commerce giant’s shares skyrocketed by 10%, the highest jump since November, after exceeding profit expectations and presenting promising future guidance.
Despite a minor setback with Apple’s shares dipping by 3% due to a slight decrease in reported revenue compared to the previous year, other companies made headlines with their growth. For instance, shares of DraftKings rose by an encouraging 7% after reporting results that exceeded analyst expectations. Simultaneously, Booking Holdings and Amgen celebrated respective gains of 8.7% and 5.5% due to their stronger-than-anticipated results, further boosting the Dow.
FactSet revealed that nearly 84% of S&P 500 companies have released their results this season, with a commendable 80% surpassing Wall Street expectations. Emmanuel Cau, Barclays’ head of European equity strategy, optimistically pointed out that despite some economic concerns, the final Q2 earnings batch highlighted strong margins and stable guidance, with an appetite for capital expenditure and returns clearly evident.
The Friday payrolls report also provided a beacon of positivity, indicating 187,000 jobs added in July. Despite falling slightly short of the 200,000 projected by economists polled by Dow Jones, the unemployment rate showed a positive decline to 3.5% from 3.6%.
More good news came in the form of average hourly wages. Indicating possible future inflation, they rose by 0.4% for the month and by 4.4% on an annualized basis, marginally exceeding the respective projections of 0.3% and 4.2%.
While major indexes might have shown a minor downward trend by the week’s close, the broader outlook remains favorable. The labor market demonstrated notable resilience against the Federal Reserve’s interest rate increases. Investors are optimistic that the jobs report will positively influence officials’ decisions at their upcoming meeting in September. Among other highlights of the week, Amazon shares outshone others with a rise of over 9% following their stronger-than-expected earnings.
Despite some minor fluctuations, the stock market ended the week on a high note. With the S&P 500, tech-heavy Nasdaq, and Dow Industrials all finishing higher, and the 10-year Treasury yield experiencing a decrease following a three-day rally, the stage is set for an optimistic economic outlook. While European stock indexes showed a slight downturn, most Asian indexes, including the Hang Seng Index and Nikkei 225, finished higher, adding to the overall global economic optimism.
