The major stock market averages posted mixed results last week. In what has been a rare event, the Dow Jones Industrial Average led the way, with a 2.1% weekly gain, while the NASDAQ Composite lagged, declining .6% for the week. The Standard & Poor’s 500 Index, was in the middle, finishing the week with gain of .7%, to 4,536.34. Noteworthy, with Friday’s gain, the Dow has now risen for ten consecutive trading sessions.
The differential between the performance of the Dow and NASDAQ most recently, shows some of the rotation that has been occurring in the market. The NASDAQ Composite, aside from being down for the week, lost over 2% on Thursday. Big cap tech stocks Tesla and Netflix lost 9.7% and 8.4% respectively, weighing on sentiment in the tech sector, after some components of their mostly positive quarterly reports disappointed investors.
Looking at overall earnings results so far, according to FactSet: For the second quarter of 2023, with 18% of S&P 500 companies reporting actual results, 75% of S&P 500 companies have reported a positive EPS (Earnings Per Share) surprise (which is below the 5-year average of 77%, but above the 10-year average of 73%); and 61% of S&P 500 companies have reported a positive revenue surprise (which is below the 5-year average of 69% and below the 10-year average of 63%). The flow of earnings reports really picks up in the week ahead, with about 30% of S&P 500 companies scheduled to announce results.
Major companies reporting numbers this week include Domino’s Pizza, General Electric, General Motors, Visa, Intel, Verizon Communications, AT&T, Chipotle Mexican Grill, Boeing, Coca-Cola, Ford Motor, Hershey, Mastercard, McDonald’s, Chevron, Procter & Gamble, Colgate-Palmolive, and Exxon Mobil. Mega technology stocks will be front and center, with reports due out from Alphabet, Meta Platforms, & Microsoft.
Along with the flood of earnings reports, financial markets will also be paying close attention to the Federal Reserve this week. The Fed meets on Tuesday and Wednesday, with a press conference by Chair Jerome Powell to follow on Wednesday afternoon. Expectations are overwhelming the Fed will hike interest rates.
According to the CME FedWatch Tool, the probability is 98.6% the Fed will raise rates by ¼ percentage point. Beyond that, things are more uncertain. However, the market seems to currently believe this will be the final interest rate hike in the Fed’s tightening cycle.
As always, please contact us with any questions or if you would like to set up a meeting.
As always, don’t hesitate to contact us with any questions or if you would like to set up a meeting.
All the best – Southport Station Financial Management, LLC