The major stock market averages posted decent gains last week. The Dow Jones Industrial Average rose 1.3% to 44,902, the NASDAQ Composite gained 1% to 21,108, while the Standard & Poor’s 500 Index added 1.5% to 6,389. Both the Standard & Poor’s 500 Index and the NASDAQ Composite closed at fresh record highs last week. Stocks were supported by optimism surrounding trade deals, specifically a deal with Japan and thoughts of a deal with the European Union, along with an overall strong start to earning season.
Looking at some individual earnings movers from last week: Tesla shares reversed 8% after reporting a decline in auto revenue; Chipotle Mexican Grill stock was cold, falling over 13% after posting a miss on revenues; T-Mobile shares had a nice ring to them, rising almost 6% on an earnings beat; International Business Machines got a “black and blue” mark, when shares dropped over 7% despite a nice earnings beat, as the bar was set high; Charter Communications shareholders did not like the program, watching shares tumble over 18% on an earnings miss; Deckers Outdoors shares climbed over 11%, gaining traction after a big earnings beat; Verizon stock added about 4% after the company rang up nice profits and beat revenue estimates. Despite the mixed action from above, the overall earnings scoreboard is looking strong so far.
For the second quarter of 2025, with 34% of S&P 500 companies reporting actual results, 80% of S&P 500 companies have reported a positive EPS (Earnings Per Share) surprise, which is above the 5-year average of 78%, and above the 10-year average of 75%, according to FactSet.
The week ahead is the busiest week of earning season, with more than 150 of the S&P 500 companies scheduled to report results. Big Tech and members of the Magnificent Seven will be the most anticipated, with Amazon.com, Apple, Microsoft and Meta Platforms all scheduled to announce results. Other notable companies reporting this week include Merck, PayPal, Starbucks, Visa, Procter & Gamble, United Parcel Service, Mastercard, Chevron, and ExxonMobil.
Besides earnings this week, investors will be watching the Federal Reserve’s policy meeting announcement on Wednesday and the Jobs Report on Friday. While no change in interest rates is expected this week, there is a 60% probability the Fed will cut interest rates in September, according to the CME FedWatch. Consensus estimates are the Bureau of Labor Statistics will report the economy added 106,000 jobs in July, and the unemployment rate edges up to 4.2%.
Investors and the financial markets will have a lot to digest this week!
All the best – Southport Station Financial Management, LLC