The Fed’s two-day meeting injected optimism into stocks
It was a shaky start to what turned out to be a bustling week on Wall Street, as traders braced for more clues on potential rate hikes from the U.S. Federal Reserve, as well as a slew of Big Tech quarterly earnings reports. A retail sector selloff stopped the major benchmarks from rallying on Tuesday, however, after Walmart (WMT) issued a grave profit warning.
Several positive post-earnings responses within the tech sector, and a promising conclusion to the Fed’s two-day meeting, injected some much-needed optimism into stocks on Wednesday, though, sending the Dow Jones Industrial Average (DJI) and the S&P 500 Index (SPX) up triple digits, while the Nasdaq Composite (IXIC) logged its best day since April 2020. Stocks cooled Thursday morning, but were able to stage a midday reversal. Friday’s trading was upbeat as well, as investors brushed off June’s personal consumption expenditures (PCE) price index, which surged to its highest level since 1982. As of this writing, all three indexes are looking to log weekly and monthly wins.
Unpacking Big Tech Earnings
It was a huge week of earnings for the tech sector. Google-parent Alphabet (GOOGL) and Microsoft (MSFT) surged on Wednesday, despite an earnings and revenue miss from both, as investors put faith into their ability to weather a potential recession. This optimism gave Instagram owner Meta Platforms (META) a halo lift, but this pop was short-lived, and by the next day the equity was plummeting on a top- and bottom-line miss. Apple (AAPL) entered the earnings confessional later in the week, joined by e-commerce giant Amazon.com (AMZN), to post revenue beats.
Spinoffs, Mergers, and Settlements of Note
Besides the deluge of earnings investors had to sift through this week, there were also plenty of corporate updates. Earlier this week, Dow-member 3M (MMM) announced it would spin off its healthcare unit into a new publicly traded company. Meanwhile Elliott Investment Management reportedly built its stake in PayPal (PYPL), while a settlement agreement from Teva Pharmaceutical (TEVA) revealed it will pay up to $4.25 billion for its alleged role in the opioid crisis. Elsewhere, Spirit Airlines (SAVE) finally agreed to be acquired by JetBlue (JBLU) for $3.8 billion, concluding a drawn-out bidding war between JBLU and Frontier Group (ULCC).
August to Kick Off With Manufacturing Data
In addition to a whole cast of corporate earnings, including reports from a few notable tech, travel and airline names, August will kick off with a number of economic indicators. Among the most important are the final S&P U.S. manufacturing purchasing managers’ index (PMI), as well as the Institute for Supply Management (ISM) manufacturing index, and non-farm payrolls data later in the week. In the meantime, dive into what previous copper crashes have meant for the broader market, and why the SPX could be in for some smooth sailing.
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