Wall St rises, eyes monthly gain

Wall St rises, eyes monthly gain

Wall Street Gains on Upbeat Earnings and Economic Outlook

Wall Street

Wall Street experienced a surge on Monday, with major indices poised to end July on a high note. The upbeat performance was driven by strong company earnings and positive outlook for the U.S. economy. Furthermore, the cooling inflation has fueled speculation about a pause in interest rate hikes.

Investors are eagerly anticipating quarterly reports from tech giants Apple, Amazon.com, and AMD later this week. In addition, the focus will be on the July ISM Manufacturing reading and employment data, including the highly anticipated non-farm payrolls. According to Refinitiv data, second-quarter earnings for S&P 500 companies are projected to have declined by 6.4% year-over-year, a slight improvement from the previous estimate of a 7.9% drop.

“We’ve wrapped up a solid month…and we’re at a point in time where we clearly have seen enough of the earnings reports to know that they’re going to come in better than feared,” said Art Hogan, chief market strategist at B Riley Wealth. This positive sentiment is supported by the strong quarterly earnings of tech-heavy companies like Alphabet, Meta Platforms, Intel, and Lam Research, which contributed to the surge in the Nasdaq last week.

Looking ahead, Hogan added, “Towards the end of the week you have economic data and if we were to see a plateau in manufacturing activity but not a collapse of job creation, that would clearly keep that soft landing narrative squarely on the table.” This suggests that a balanced economic growth would provide further reassurance and bolster market sentiment.

Considering the positive outlook, Citigroup has raised its 2023 and mid-2024 S&P 500 targets to 4,600 and 5,000 respectively, indicating a higher possibility of a soft landing. The benchmark index is merely 4.9% away from its all-time intraday high reached on January 4, 2022.

Chicago Fed President Austan Goolsbee mentioned that the central bank is skillfully managing inflation without causing a recession. The data will be closely observed to determine if further monetary tightening may be appropriate in September.

As of 9:48 a.m. ET, the Dow Jones Industrial Average was up 0.15%, the S&P 500 was up 0.23%, and the Nasdaq Composite was up 0.30%. The energy sector saw a significant 1.7% rise, driving gains in nine of the top 11 S&P 500 sectors. SoFi Technologies, a financial services provider, saw a remarkable 20.9% surge in its stock price after reporting better-than-expected quarterly revenue. Another notable performer was ON Semiconductor, with a 4.6% increase in its stock price, following the chipmaker’s forecast of third-quarter revenue above market estimates.

However, Johnson & Johnson, a Dow component, experienced a 2.8% decline after a U.S. judge rejected the company’s second attempt to settle thousands of lawsuits related to its talc products. Additionally, the U.S.-listed shares of Xpeng dropped by 11.6% following a downgrade by brokerage UBS. Conversely, Adobe’s stock price rose by 3.5%, outperforming its tech peers, as Morgan Stanley upgraded the photoshop maker’s rating to “overweight.”

In terms of market breadth, advancing issues outnumbered decliners by a ratio of 3.50-to-1 on the NYSE and 2.35-to-1 on the Nasdaq. The S&P index recorded 16 new 52-week highs, while the Nasdaq saw 52 new highs and 19 new lows.

Overall, Wall Street’s positive performance in July reflects the resilience of the U.S. economy and the strength of corporate earnings. With the anticipation of more solid earnings reports and encouraging economic data in the coming weeks, the market is poised for further optimism.

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