Netflix Earnings and Apple Sales Boost Wall Street Indices

Netflix Earnings and Apple Sales Boost Wall Street Indices: Wall Street stock indexes saw a significant
rise as traders continued to analyze major company earnings, leading to the longest weekly rally of 2024.
These gains were driven by strong earnings reports from
Netflix and Apple, bolstering the market’s upward trend.

 

Table of Contents

Strong Performance of Stock Indexes

Netflix Earnings and Apple Sales

Magnificent Seven” Profits Strengthen the Rally

Impact of the U.S. Elections on Markets

Performance of U.S. Stock Indices

Future Outlook and Cautious Sentiment

Economic Outlook Post-Election

Positive Environment for U.S. Stocks

Challenges for the Technology Sector

Challenges for the Magnificent Seven Index

Economic Growth and Market Sustainability

 

 

 

 

Strong Performance of Stock Indices

Wall Street traders led stocks into the longest weekly rally of 2024 as they reviewed company earnings
and signals indicating the resilience of the world’s largest economy.
On the 37th anniversary of Black Monday (when the market crashed in 1987),
stock indexes reached all-time highs, with gains across most major sectors.
The
S&P 500 rose for the sixth consecutive week,
while an equal-weight index that gives Target the same weight as
Microsoft hit a record high,
as investors hoped the rally would broaden.


Netflix Earnings and Apple Sales

Netflix shares surged 11% after the announcement of strong earnings,
while
Apple shares rose 1.2% due to increased sales of its latest iPhones in China.
In contrast,
American Express shares fell 3.2% after lowering its revenue forecasts.

 

Magnificent Seven” Profits Strengthen the Rally

Most of the profit growth in the S&P 500  index comes from the large-cap
companies known as the Magnificent Seven (
Apple, Tesla, Microsoft, Nvidia, Alphabet, Meta, Amazon).
According to Bloomberg Intelligence, these companies are expected to report an 18% earnings growth in the third quarter.
In comparison, other companies in the index are expected to see only a modest 1.8% increase.

 

Impact of the U.S. Elections on Markets

As the U.S. presidential elections draw closer and the chances of Donald Trump winning increase,
investors have shifted their money toward assets that benefited from his victory in 2016,
such as bank stocks and small-cap companies.
According to a memo from
Bank of America, banks, small-cap companies,
and the dollar was among the biggest beneficiaries of stock gains in 2016 after Trump’s victory.

 

Performance of U.S. Stock Indices

The S&P 500  rose by 0.4%, marking its 47th record close in 2024.
Meanwhile, the
Nasdaq 100 climbed 0.7%, while the Dow Jones remained relatively unchanged.
The
Russell 2000 small-cap index underperformed on Friday but gained around 2% weekly.

 

 

 

 

 

 

 

Future Outlook and Cautious Sentiment

In a memo titled “Nation of Rotation,” Mike O’Rourke of JonesTrading
noted that the most recent gains were due to the broadening rally across different industries.
While technology stocks advanced, they still lagged behind other sectors in the
S&P 500.
As inflation has slowed since mid-2024, interest rate cuts are expected to support economic growth and boost overall market sentiment.

 

Economic Outlook Post-Election

Although optimism returned to the markets this week,
uncertainty surrounding the U.S. elections continues to affect overall sentiment.
The Ned Davis research index, which measures trading sentiment,
shows that each time optimism rises in an election year, stock performance is average during the election period.
However, the market may experience a post-election rally if political uncertainty persists.

 

Positive Environment for U.S. Stocks

David Lefkowitz of UBS Global Wealth Management stated that
the environment remains favorable for U.S. stocks, noting that earnings growth is expanding significantly.
While the election adds a layer of uncertainty,
it is unlikely to drastically change the overall market environment.

 

Challenges for the Technology Sector

As investors await results from major tech companies,
Quincy Krosby from LPL Financial noted that a slight pullback in performance
could provide some support as the earnings season approaches.
Meanwhile, Chris Senyek from Wolfe Research suggested that major companies must
outperform elevated earnings expectations to maintain market leadership.

 

Challenges for the Magnificent Seven Index

Ed Yardeni, founder of the research firm bearing his name,
raised questions about whether the S&P 439 index (which excludes the Magnificent Seven) could outperform it.
While the Magnificent Seven have shown strong performance,
their stocks have been volatile due to concerns about valuations and slowing growth rates.

 

Economic Growth and Market Sustainability

David Donabedian from CIBC Private Wealth US said, “The sustainability of the bull market in stocks is improving.”
He noted that third-quarter earnings were strong, and economic data continues to point to growth.
Additionally, retail sales this week exceeded expectations,
indicating that consumers are still spending and the market’s positive performance is expanding.

Looking ahead to next week, Tesla faces challenges during its earnings call.
Investors expect answers regarding production goals and regulatory issues,

particularly after the much-promoted Cyber Cab (self-driving taxi)

failed to inspire investors and ease concerns about recent vehicle sales.

Meanwhile, Boeing will need to reassure investors who are increasingly worried about production delays,
labor disputes, and depleted financial resources. Reports from United Parcel Service,

Norfolk Southern Corp and Southwest Airlines are expected to reveal
the combined impact of Hurricane Helen and a three-day port
workers’ strike on the East Coast during the last quarter.


Netflix Earnings and Apple Sales Boost Wall Street Indices

Technology Stocks Weigh on Wall Street Indices

Technology Stocks Weigh on Wall Street Indices: The S&P 500 index fell by 1% after a four-week streak of gains,
as heavy selling in significant tech stocks dragged Wall Street indices down.
This decline was also driven by increasing geopolitical concerns

and speculation that the Federal Reserve might reduce the scale of interest rate cuts next month.

 

Content

S&P 500 Index

Impact of Geopolitical Tensions

Performance of Tech Stocks

Optimism in the Job Market and Economy

Start of Earnings Season

 

 

 

 

S&P 500 Index and Tech Stocks

The S&P 500 index dropped by 1% after a four-week rally.
Shares of
Alphabet (Google’s parent company) fell by 2.4%
following a court ruling, developers can create competing marketplaces for the Google Play Store.
Additionally,
Brent crude oil prices surged above $80 per barrel amid escalating tensions in the Middle East.
U.S. Treasury bonds continued to decline, with the 10-year bond yield rising to 4%.

 

Impact of Geopolitical Tensions

Chris Larkin from E*TRADE, a subsidiary of Morgan Stanley,

noted that Friday’s strong jobs report reduced the likelihood of a 50-basis-point interest rate cut in November.
It also increased the chances that the Federal Reserve might keep rates unchanged if economic data continues to outperform.
Dave Sekera from Morningstar warned that further geopolitical escalation
could encourage a shift toward safe-haven investments in value stocks at the expense of growth stocks,
suggesting that energy sectors may benefit in such scenarios.

 

Performance of Tech Stocks

On Monday, all major sectors in the S&P 500 fell, except for the energy sector.

The “Magnificent Seven” index—comprising Amazon, Tesla, Alphabet, Meta, Nvidia, Apple, and Microsoft—declined by 1.9%.
Amazon’s shares dropped by 3.1% after Wells Fargo downgraded its stock rating.
At the same time,
Apple shares fell by 2.3% following a warning from
a Jefferies analyst said investors’ expectations for the new iPhone are overly optimistic.
In contrast,
Nvidia bucked the trend, with its shares rising.

 

 

 

Optimism in the Job Market and Economy

Despite the stock decline, some strategists are more optimistic about the strength of the job market and the overall economy.
Michael Wilson from
Morgan Stanley raised his outlook on cyclical stocks relative to safer defensive stocks,
citing robust economic data and expectations of more interest rate cuts from the Federal Reserve.

David Kostin from Goldman Sachs also raised his 12-month target for the S&P 500 to 6,300 points.

Meanwhile, BlackRock strategists reaffirmed their confidence in U.S. stocks, highlighting slowing inflation and lower interest rates.

 

 Start of Earnings Season

As the earnings season approaches, traders closely watch corporate performance beyond the macroeconomic picture.
Analysts expect the third-quarter earnings season to be a fruitful opportunity for investors who follow active money management strategies,
according to strategists at
Bank of America.
In a memo on Monday, a team led by Ohsung Kwon stated that
“the options market expects the largest implied move in individual stocks after earnings since 2021,

while volatility in the S&P 500 remains low.”
They added that the upcoming earnings season will provide a prime environment for stock pickers.

Financial sector earnings will kick off on Friday,

with reports from JPMorgan Chase, Wells Fargo, and BlackRock.
According to Bloomberg Intelligence, net interest income and capital market revenues

will be critical areas of focus after the Federal Reserve’s rate cut in September.

In the airline sector, Delta Air Lines—the first major U.S. airline to report its results this quarter
—is expected to provide insight into travel demand following reports from
Airbnb

and Booking Holdings, which indicated a decline in holiday spending.

 

 

Technology Stocks Weigh on Wall Street Indices

Wall Street Indices Rise Amid Rate Cut Expectations Following Inflation Report

Wall Street Indices Rise Amid Rate Cut Expectations Following Inflation Report:
S&P 500 Climbs for Fifth Consecutive Day, Recording the Longest Winning Streak in Over a Month

 

Content
Market Bets
Rate Cut

Green Light for Rate Cut
Anticipated Reports

 

 

 

Markets Bet on Less Than 35 Basis Points Rate Cut in September

Wall Street indices rose amid sustained bets that the Federal Reserve will begin cutting interest rates in September,
following a U.S. inflation report that aligned with expectations.
The S&P 500 index (S&P 500) climbed for the fifth consecutive day,
achieving the longest winning streak in over a month.
Most major sectors, led by financials and energy, also rose.
Meanwhile, Treasury yields remained within narrow ranges, and the dollar’s value stayed near its lowest levels in four months.

The Consumer Price Index (CPI) showed a trend toward price contraction,
relieving markets that are still reeling from last week’s downturn.
With a weakening labor market, the Federal Reserve is widely expected to start cutting interest rates next month,
However, upcoming data will likely determine the extent of the expected cut.

 

Expected Rate Cut Amount

Chris Larkin from E*Trade, a subsidiary of Morgan Stanley, said,
“The CPI may not have been as strong as the Producer Price Index (PPI) released yesterday,
but it likely won’t alter the overall picture.”
The main question is whether the Fed will cut interest rates by 25 or 50 basis points next month.
If most data over the next five weeks indicates economic slowing,
the central bank might opt for a more significant rate cut.

On the other hand, Krishna Guha from Evercore said that while the CPI for July wasn’t perfect,
it was good enough as it aligned with the quieter inflation data favored by the Federal Reserve.
He pointed out that the central bank has shifted its focus to broader outlooks and risk balance,
with negative employment risks dominating since the July jobs report.
He emphasized that “the Fed is now prioritizing labor data over inflation data,
and upcoming labor market data will determine how aggressively the Fed proceeds with rate cuts.”

The S&P 500 hovered around the 5455-point level, while the performance of major stocks was mixed,
with Nvidia and Alphabet shares declining. The “fear gauge” in Wall Street—VIX—continued its decline,
falling to 16 points after an unprecedented spike to 65 points last week.
Meanwhile, 10-year Treasury yields decreased by one basis point to 3.83%.
Swap traders expect a rate cut of less than 35 basis points in September.

 

 

 

 

Green Light for Rate Cut

Mark Hackett from Nationwide said that “calming macro concerns” are among the factors creating better conditions for stocks,
noting that the pressure from market declines has now “faded into oblivion.”

According to strategists at TD Securities, led by Oscar Munoz and Gennadi Goldberg,
the latest CPI report gives the Federal Reserve the green light to cut interest rates in September.
They stated, “Today’s CPI report is unequivocally good news for the Federal Reserve.”
With risks now evenly balanced or slightly tilted towards negative employment outcomes,
they expect the Fed’s next decision to entail the first rate cut.

Chris Zaccarelli from Independent Advisor Alliance believes the July CPI report essentially bears the message of “no new news is,
in itself, good news,” as markets were on edge. The Fed is looking to cut rates, but there is nothing in this report preventing them from doing so.

Seema Shah from Principal Asset Management said that the CPI numbers
remove any remaining inflation-related obstacles that might have prevented the Fed from starting a rate-cutting cycle in September.
However, the data also suggests limited urgency to cut by 50 basis points.

Florian Ilbo from Lombard Odier Investment Managers said the report offers little new information
to guide the Fed’s future decisions besides supporting the likelihood of a rate cut due to labor market concerns.

 

Anticipated Reports

Traders still expect a total monetary easing of just over one percentage point this year,
with three Federal Reserve policy meetings remaining this year.
In recent sessions, the market has been divided over
whether the September rate cut will be 25 or 50 basis points.

Brian Rose from UBS Global Wealth Management said,
“The inflation data was good enough to allow the Fed to begin cutting rates in September,
but it doesn’t give them a reason to cut aggressively.”
He added, “The decision on whether to cut by 50 basis points instead
of the usual 25 basis points could come down to the August jobs report.”

He also pointed out that Thursday’s upcoming retail sales figures represent another important data point,
with the primary downside risk to his base assumption of a soft landing being a decline in consumer spending.

Neil Sun, portfolio manager at BlueBay at RBC Global Asset Management,
commented, “The U.S. economy is slowing sustainably, and the labor market is showing some signs of slowing.
However, we are not overly concerned about short-term recession risks in the U.S.
We are prepared to cautiously take advantage of any dips resulting
from volatility if the underlying trends of easing inflation and sustainable economic slowdown in the U.S. continue.”

 

Wall Street Indices Rise Amid Rate Cut Expectations Following Inflation Report

Wall Street Indices Near All-Time Highs Awaiting Nvidia Results:

Wall Street Indices Near All-Time Highs Awaiting Nvidia Results: At the end of the recent trading sessions,
the S&P 500 index closed at around 5308 points, reflecting market stability.
Simultaneously, Nvidia’s shares significantly rose due to analysts’ bullish expectations for further stock price increases.
On the other hand, Treasury bonds declined at the start of a busy week with new investment-grade bond issuances,
reflecting investor movements in the financial market.

 

Contents

Nvidia Results

S&P 500 Index

Maintaining Momentum

Reasons for Index Rise
Beneficiary Sectors

Stock Evaluations

The Next Step

Unlikely Earnings Scenario

 

 

 

Nvidia Results

The U.S. stock market indices hover near their all-time highs just days before Nvidia Corp,
one of the “Magnificent Seven” announces its results.
In a highly anticipated event for both Wall Street and the tech world, the chipmaker,
at the heart of the AI frenzy fueling the bull market, will report its earnings on Wednesday.
Investors seek numbers and guidance from CEO Jensen Huang to renew confidence in the insatiable demand for its chips.

Jay Woods from Freedom Capital Markets stated, “For the market to maintain momentum this week,
it might all come down to one stock: Nvidia.
” He added, “Well, that’s not entirely true, but the buzz around this
earnings event will be the talk of trading desks and media all week.”

 

S&P 500 Index

The S&P 500 index closed at around 5308 points.
Nvidia’s shares rose based on analysts’ bullish expectations.

Ethereum led a rise in cryptocurrency prices amid speculation that opposition is easing towards
an exchange-traded fund tracking the second-largest cryptocurrency.
JP Morgan Chase shares fell after Jamie Dimon said the bank would not repurchase many shares “at these prices.”

Another group of Federal Reserve spokespersons reiterated a wait-and-see approach regarding interest rates.
Treasury bonds fell at the start of a busy week with new investment-grade bond issuances
as companies rushed to sell bonds before the U.S. holiday weekend.
Ten-year bond yields rose by two basis points to 4.44%.

 

Maintaining Momentum

Chris Larkin from ETRADE at Morgan Stanley said the market faces a familiar question:
Can the Bulls maintain momentum?
He added, “Traders seemed pleased with last week’s economic numbers,
which were in a moderate range,” and noted that with a relatively light economic calendar this week due to a lack of significant data,
“earnings are expected to drive market discussions, with Nvidia topping a strong list of tech and retail names.”

 

 

 

 

Reasons for Index Rise

The S&P 500 index set several records in 2024, with U.S. stocks gaining $12 trillion since late October.
Part of this is due to hopes for a soft landing with the economy remaining relatively strong while inflation cools,
fueling bets that the Federal Reserve will cut interest rates this year.

The other part is enthusiasm for AI technology. The chip giant Nvidia is responsible for about a quarter of the index’s gains.
Besides Microsoft, Meta, and Alphabet (Google’s parent company), nearly 53% of the benchmark’s gains come from just five stocks.

Jason Trennert from Strategas Securities said, “Since companies like Cisco emerged in the late ’90s,
we can’t recall a single stock having such a massive impact on overall market expectations.”
He added that Nvidia’s earnings announcement last May “made even the most skeptical investors regarding AI’s future take notice.”

 

Beneficiary Sectors

For Jason Draho from UBS Global Management, Nvidia’s results could enhance AI tailwinds,
amplifying a buying wave driven by profit motives.
Shares of the world’s largest chipmaker by market value have risen about 5%
in the second quarter after climbing 82% in the year’s first three months.

As of Friday’s close, options markets were pricing in an 8.6% swing in Nvidia’s shares in the session after it announced its earnings.
David Donabedian from CIBC Private Wealth in the U.S. said,
“The company’s report will be scrutinized, and the bar may become too high to clear at some point.”

Bank of America strategists, led by Ohsung Kwon, considered that Nvidia, the darling of AI,
will no longer be the main stock-driving stock market gains as the benefits
of emerging technology expand to include other industries. Strategists see industries, commodities,
and utilities as some of the key beneficiaries.

 

Stock Evaluations

The recent rise in tech stocks has been supported by strong first-quarter reports and the anticipation of robust earnings,
but “valuations remain a concern,” according to strategists from RBC led by Lori Calvasina.
Saira Malik from Nuveen said, “With stock valuations already high, there may be less room for further increases,”
and suggested making additional portfolio allocations to sectors that have lagged behind the broader
market due to their cyclical nature and sensitivity to interest rates.

From her perspective, investors should pay attention to the likelihood of
a significant underweight position in U.S. small-cap stocks and listed real estate,
as these industries could rebound once the Federal Reserve finally shifts to a more accommodative monetary policy.

 

 

 

 

The Next Step

After experiencing the first decline of more than 5% this year, the S&P 500 has rebounded and is heading for its best month in 2024.
So, what’s the next step? History, though not guaranteed,
suggests that investors should stay the course by letting the winners win, according to Sam Stovall from CFRA.

He noted that during the 35 recovery periods following a decline since 1990,
which typically lasted 3.5 months before slipping into another decline of 5% or more,
The index rose by an average of 8.6%.
Furthermore, the three sectors that led the market during the recovery phase continued
to outperform the index in the post-recovery period, with an average rise of 10%,
outperforming the index 68% of the time, as Stovall said.

 

Unlikely Earnings Scenario

American earnings would need a sharp jump in the third and fourth quarters to meet analysts’ current full-year estimates.
This scenario is “unlikely” if economic data remains weak,
according to strategists from JPMorgan led by Mislav Matejka.
Michael Wilson from Morgan Stanley now expects the S&P to rise by 2% by June 2025,

a significant shift from his view that the benchmark index would fall by 15% by December.

The strategist, whose bearish predictions for 2023 failed to materialize as markets continued to rise,
finally capitulated, raising his target for the S&P to 5400 points from 4500 points. Wilson wrote,
“In the U.S., we expect strong earnings per share growth alongside modest multiple compression.”

According to strategists at HSBC led by Max Kettner, the rally in risk assets will last longer,
partly because short-term sentiment and positions have yet to send a warning signal.
Kettner added, “Our machine learning models suggest a stock market environment where everything is rising.”

 

 

Wall Street Indices Near All-Time Highs Awaiting Nvidia Results:

Major US stocks are falling and oil is rising slightly

Major US stocks are falling and oil is rising slightly

Major US stocks are falling and oil is rising slightly :The United States of America published its Federal Reserve report’s minutes, showing an intention to end the QE program soon. 

Evest follows all developments in the trading markets in the following report.

Topics:

Results of the Federal Reserve Board meeting’ minutes in September

Wall Street indices in the Green Zone

Wholesale declines in US stocks

Oil prices rise slightly

The Energy Information Management forecasts on oil prices

 

 

Results of the Federal Reserve Board meeting’ minutes in September

The minutes of the September meeting of the Federal Reserve System (FRS), released on Wednesday,
showed that leaders of the United States Central Bank are ready to begin ending the QE program in the coming months and complete it by mid-2022. 

Market participants viewed this as a positive signal, indicating that the Fed sees significant progress in the US economy’s recovery from the effects of the pandemic,
according to MarketWatch.

According to the protocol, Federal Reserve leaders discussed a rough plan that would reduce the volume of asset buybacks by $15 billion per month,
particularly US Treasury bonds – by $10 billion and mortgage bonds by $5 billion.

“Some Fed leaders have said they prefer to reduce ransom more quickly” – the record said.

The US Labor Department data, released on October 13,
showed that country’s consumer prices index (CPI) in September rose by 5.4% compared to the same month last year. 

Thus, inflation accelerated from 5.3% the previous month and was the highest in 13 years.
Analysts predicted it would remain at the August level at an average of 5.3%, according to Trading Economics.

Wall Street indices in the Green Zone 

The Dow Jones industrial index ended trading on Wednesday at the level of the previous session, and the Standard & Poor’s and Nasdaq composite indices rose by the end of the session.

The Dow Jones industrial index remained virtually unchanged on Wednesday and closed at 34377.81 points.

Standard & Poor’s 500 rose by 13.15 points (0.3%) to 4363.8. The Nasdaq Composite Index rose by 105.71 points (0.73%) to 14571.64.

US Treasury yields declined on Wednesday, affecting banks’ stocks, but supporting technology companies’ stocks.

The interest rate on the US 10-year Treasury bonds fell to 1.541% from 1.575%.

 

 

Wholesale declines in US stocks

JPMorgan Chase’s stock price declined by 2.6% on the basis of Wednesday’s trading after the bank’s third-quarter report was published.

JPMorgan’s net income in the fourth quarter rose by 24%, better than market expectations.

The Bank’s growth was due in particular to the cancellation of a potential loan loss provision of $2.1 billion,

but the Bank’s quarterly revenue rose by only 1.3%,worse than analysts’ expectations.

Citigroup, Bank of America and Goldman Sachs Group shares fell by 0.5%, 0.9% and 0.1%, respectively.

The US investment firm BlackRock’s stock rose by 3.8%.

It is the largest company in the world in terms of managed assets, with a net profit of 23% in the third quarter of 2021 and revenue of 16%.

Earnings excluding non-recurring factors were $10.95 per stock, exceeding analysts’ average of $9.57 per stock.

Delta Airlines, which also issued its quarterly earnings on Wednesday, declined by 5.8%.

The airline posted a net profit for the first time since the COVID-19 pandemic,

but warned that higher fuel prices would prevent it from continuing to make a profit in the fourth quarter.

Apple’s stock fell by 0.4% following a Bloomberg report that the company could reduce its plan to produce iPhone 13 smartphones in 2021 by 10 million units,

due to a shortage of semiconductor components.

Qualcomm’s stock rose by 1.7%.

The day before, the company announced that its board of directors had agreed to launch a new $10 billion stock buyback program.

 

 

Oil prices rise slightly

Oil prices resumed growth on Thursday after a slight decline the previous day.

The energy crisis in Europe and Asia continues to exert pressure on the market,

contributing to increased oil demand with a moderate increase in production by OPEC + countries.

The US oil reserve rose by 5.123 million barrels last week from 951 thousand barrels a week ago,

according to the American Petroleum Institute (API).

Official data from the US Energy Administration will be released later in the day.

The experts interviewed by Standard & Poor’s Global Platts expected the country’s oil reserves to decline last week by an average of 500 thousand barrels,

and gasoline – 400 thousand barrels, distillation products – 800 thousand barrels.

The cost of Brent crude futures for December on the London Stock Exchange ICE Futures on Thursday is $83.76 per barrel,

$0.58 (0.7%) higher than the closing price of the previous session. 

As a result of Wednesday’s trading, these futures fell $0.24 (0.3%) – to $83.18 per barrel.

The price of West Texas Intermediate crude futures for November in electronic trading on the New York Mercantile Exchange (NMX) is $80.97 per barrel,

$0.53 (0.66%) higher than the final value of the previous session.

The day before, these futures fell by $0.2 (0.3%) – to $80.44 per barrel.While API data indicate the largest weekly jump in U.S. oil reserves since March,

Citigroup analysts believe reserves will fall sharply by the end of the year as businesses shift from using significantly higher gas prices to oil. 

In their view, this could lead to a price jump of $90 per barrel.

On Wednesday, the Energy Information Administration (EIA) of the United States Department of Energy,

raised its forecast on the average price of Brent crude for the current year to $81 per barrel from $71 per barrel. 

The Energy Information Administration also raised its forecast on the average price of Brent and West Texas intermediate crude for 2022.