S&P 500 gains, helped by Apple and Amazon, as index heads for best month since 2020
The S&P 500 rose on Friday on strong earnings from tech big names Apple and Amazon to cap its biggest monthly gain in nearly two years.
The broad stock index climbed 0.9%, while the Nasdaq Composite gained 1.3%. The Dow Jones Industrial Average advanced 112 points, or 0.3%.
Wall Street was expected to post strong weekly gains. The Dow Jones is now up 1.9% on the week, while the S&P 500 and Nasdaq Composite are up 2.9% each.
The major averages were also on pace for their best month of the year. The Dow Jones is on track for a gain of more than 5% for July, which would be its highest level since March 2021. The S&P 500 is up 7.8% for the month and the Nasdaq Composite, although still in bearish territory, is up more than 10%. Both are looking at their biggest monthly gains since November 2020.
This performance contrasts sharply with the previous six months when stocks fell to their June bear market levels. The market reversed as investor fears over the aggressive pace of Federal Reserve interest rate hikes began to fade and the notion that inflation may have peaked started to settle.
Still, some remain concerned about inflation levels with Russia’s ongoing war against Ukraine and the possibility of markets falling again. On Friday, the Bureau of Economic Analysis reported that the June personal consumption index climbed 6.8% year-on-year. This inflation indicator, closely watched by the Fed, has reached its highest level since January 1982.
Big Tech Profit Rising Indices
Nonetheless, gains in two of the market’s biggest stocks pushed the major averages higher. Amazon shares jumped 10% after the e-commerce giant reported stronger-than-expected sales for the previous quarter, while Apple soared about 2% after posting better-than-expected iPhone revenue .
Chevron and Exxon Mobil also posted better-than-expected results for the prior quarter, pushing their shares up about 5% and 2%, respectively.
However, the latest round of corporate results has been mixed.
Roku shares fell more than 26% after the company missed estimates and warned of a slowdown in advertising. Chipmaker Intel fell 11% after its quarterly results fell short of expectations.
More than half of S&P 500 companies reported earnings, with 72% of those names beating expectations, according to FactSet data.
The moves come after the Federal Reserve raised three-quarters of a percentage point on Wednesday and a negative GDP reading on Thursday.
“The market is hoping that slowing economic growth will translate into a more dovish Fed, albeit a bit further out. So it would make sense to me that lower rate expectations going forward would translate into a bit momentum in equity markets,” said Lauren Goodwin, economist and portfolio strategist at New York Life Investments.
However, Goodwin warned that the unusual economic environment and the long time before the next Fed meeting makes it difficult to predict the central bank’s path from here.