Stocks climbed for a third consecutive session on Friday as investors digested strong tech earnings and looked past concerns about high inflation and a recessionary environment.
The Dow Jones Industrial Average advanced 315.50 points, or nearly 1 per cent, to 32,845.13. The S&P 500 jumped 1.4 per cent to 4,130.29, and the Nasdaq Composite added about 1.9 per cent to end the day at 12,390.69.
The Dow rose to a 6.7 per cent gain for July. To officially exit its bear market, the average needs to close at or above 32,877.66 which is around 30 points higher.
The S&P 500 added 9.1 per cent for the month. The Nasdaq Composite, while still in bear market territory, is up roughly 12.4 per cent. Those were the biggest monthly gains for all three indexes since 2020.
For the tech-heavy Nasdaq Composite, the month was the best performance on record, as tracked by Dow Jones Market Data Group, rising 12.3 per cent for the largest percentage gain since April 2020 — fueled by better-than-expected results from Microsoft, Amazon and Apple, as well as falling Treasury yields with the 10-year settling at 2.642 per cent on Friday.
Across the sectors the earnings calendar was a big tailwind on Friday with big tech and energy in focus. Energy rallied on crude and Big Oil earnings with Chevron +9 per cent and Exxon Mobil +4.5 per cent posted better-than-anticipated results for the previous quarter.
Amazon shares popped nearly 10.4 per cent after the e-commerce giant reported stronger-than-expected sales for the previous quarter, the positive comments from C.E.O. Andrew Jassy and other top executives caused investors to shrug off the fact that the giant internet retailer reported its slowest quarterly sales growth in two decades, and has cut nearly 100,000 workers. Apple’s quarterly results were also better than expected, as Big Tech’s profits have been resilient even as the economy has slowed.
However, the latest batch of corporate results has been mixed – particularly in the retail sector. It’s becoming clear that retailers badly misjudged supply and demand. Part of their miscalculation was caused by supply chain delays, which prompted companies to secure products far in advance. Strong consumer spending may have saved the economy from ruin during the pandemic, but it has also led to enormous excess and waste. With retailers now forced to slash prices on inventory in their stores and online.
More than half of S&P 500 companies have reported earnings, with 72 per cent of those names beating expectations, FactSet data shows. Another flurry of reports coming, with 152 S&P constituents scheduled to report next week.
BofA Flow Show report noted that US equities attracted $9.5B in the week-ended 27-Jul, the most in six weeks.
The US dollar index was down 0.4 per cent with Yen weakness the big FX story of the week.
One Australian dollar at 7:10 AM is flat, buying 69.90 US cents (Fri: 69.95 US cents), 57.55 Pence Sterling, 93.07 Yen and 68.40 Euro cents.
Iron ore futures are pointing to a 3.8 per cent gain.
Gold gained $12.60 or 0.7 per cent to US$1782 an ounce, rising to a fresh multi-week peak on Friday with its safe-haven allure getting a resurgence as the $US dollar gave up initial gains
Silver was up $0.33 or 1.7 per cent to US$20.20 an ounce.
Copper was up $9.90 or 2.9 per cent to US$357.35 a pound.Copper producers are pushing back on Chile’s royalty proposal, as they will require greater regulatory clarity before proceeding with major investment. These reforms are expected to add uncertainty to future investment decisions needed to help fill a global supply gap, as demand rises into the clean-energy transition.
Oil gained $2.20 or 2.3 per cent to US$98.62 a barrel as oil prices rose in European trading as attention turned to next week’s OPEC+ meeting and expectations that it will dash U.S. hopes for a supply boost.
The SPI futures are pointing to a 0.7 per cent gain.
Figures around the globe
Across the Atlantic, European markets closed higher. Paris added 1.7 per cent, Frankfurt gained 1.5 per cent and London’s FTSE closed 1.1 per cent higher.
Asian markets closed lower. Tokyo’s Nikkei fell 0.1 per cent, Hong Kong’s Hang Seng lost 2.3 per cent and China’s Shanghai Composite closed 0.9 per cent lower.
On Friday, the Australian sharemarket gained 0.8 per cent to 6,945.
There is one company set to trade without the right to a dividend.
NB Global Corporate Income Trust (ASX:NBI) is paying 0.7111 cents unfranked.
There is one company set to pay eligible shareholders today.
Collins Foods (ASX:CKF)
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics