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Wall Street closed sharply higher on Friday led by a strong rally in tech and energy stocks. Investor mood was upbeat based on strong tech earnings. The markets expected the Fed to go easy on the monetary policy as the U.S economy has “technically” entered a recession. All the three major stock indexes ended in the green.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) advanced 1% or 315.50 points to close at 32,845.13. Notably, 23 components of the 30-stock index ended in positive territory, while six ended in red and one remained unchanged.
The tech-heavy Nasdaq Composite finished at 12,390.69, rising 1.9% or 228.10 points due to the strong performance by large-cap technology stocks.
The S&P 500 gained 1.4% or 57.86 points to end at 4,130.29. Nine out of 11 broad sectors of the index closed in the green. The Energy Select Sector SPDR (XLE), the Consumer Discretionary Select Sector SPDR (XLY) and the Technology Select Sector SPDR (XLK) rallied 4.3%, 3.9% and 1.5%, respectively, while the Consumer Staples Select Sector SPDR (XLP) lost 0.8%.
The fear-gauge CBOE Volatility Index (VIX) was down 4.5% to 21.33. A total of 11.35 billion shares were traded Friday, higher than the last 20-session average of 10.79 billion. Advancers outnumbered decliners on the NYSE by a 2.92-to-1 ratio. On Nasdaq, a 1.44-to-1 ratio favored advancing issues.
“Technical” Recession Might Signal End of Fed Hawkishness
The U.S. GDP growth rate went down 0.9%, declining for the second straight quarter. The decline of the GDP growth rate over two consecutive quarters is generally considered a strong sign of recession. Although opinion is divided on whether this can actually be considered as the U.S. entering a recession, as other macro-economic factors suggest otherwise, investor sentiment prevails that this would urge the Fed to stop further monetary policy tightening.
Better-Than-Expected Earnings Season
Even though the earnings season has been mixed, the market has taken to it on a positive note because the concern was that it was going to be uniformly negative. Also, markets are upbeat on the fact that regardless of what the second quarter earnings are, many companies like Microsoft Corporation (MSFT - Free Report) and Amazon.com, Inc. (AMZN - Free Report) have painted a rosy picture for future guidance.
Tech stocks have been rallying this week based on strong earnings reports from big companies in the sector, while Energy stocks have risen on the basis of a surge in oil and gases prices. Consequently, shares of Chevron Corporation (CVX - Free Report) and Exxon Mobil Corporation (XOM - Free Report) gained 8.9% and 4.6%, respectively. Chevron carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Economic Data
According to a government report, Personal Income for June increased by 0.6% for the month of June, exceeding the Zacks Consensus Esmite of a 0.5% increase for the period. The revised estimate for May was pushed up to 0.6%.
Personal Spending for June increased 1.1% for the month of June, exceeding the Zacks Consensus Estimate of a 0.9% increase for the period. The revised estimate for May was raised to 0.3%.
Personal Savings Rate for June came down to 5.1% from the revised figures of 5.5% from May.
PCE Inflation grew by 0.1% in June against the revised figures of a 0.3% fall in the month of May. Core PCE inflation grew by 0.6% against a consensus of 0.5%, up from the revised growth of 0.3% in May.
As reported by the University of Michigan, Consumer Confidence increased to 51.5 in July compared to the consensus of 51.2. In June, it had come to 51.1.
Weekly Roundup
The three most widely followed indexes witnessed a strong rebound last week, providing some relief from the market's brutal sell-off this year. The tech-heavy Nasdaq notched a 4.7% gain last week, while the Dow Jones Industrial Average and the S&P 500 rallied 3% and 4.3%, respectively. Strong labor market data showing wage growth in a tight jobs market and strong earnings figures from tech behemoths like Apple and Amazon helped the rally in the stocks. A government report on Thursday showed that the U.S. economy contracted for the second straight quarter, suggesting that it was on the cusp of a recession. Although this outlook appears grim, it led to investor anticipation that the Fed would ease off on its monetary policy tightening.
Monthly Roundup
The Dow rose to a 6.7% gain for July, while the S&P 500 added 9.1% for the month. The Nasdaq Composite, albeit still in bear market territory, is up 12.4%. These are the biggest monthly gains for all three indexes since 2020. This is in stark contrast to the previous six months, which led to the stocks tumbling to their June bear market levels. Stocks did well in July as investors grew less apprehensive about the aggressive pacing of the Fed’s monetary policy tightening, and on the idea that inflation has perhaps peaked has started to settle in.
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Stock Market News for Aug 1, 2022
Wall Street closed sharply higher on Friday led by a strong rally in tech and energy stocks. Investor mood was upbeat based on strong tech earnings. The markets expected the Fed to go easy on the monetary policy as the U.S economy has “technically” entered a recession. All the three major stock indexes ended in the green.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) advanced 1% or 315.50 points to close at 32,845.13. Notably, 23 components of the 30-stock index ended in positive territory, while six ended in red and one remained unchanged.
The tech-heavy Nasdaq Composite finished at 12,390.69, rising 1.9% or 228.10 points due to the strong performance by large-cap technology stocks.
The S&P 500 gained 1.4% or 57.86 points to end at 4,130.29. Nine out of 11 broad sectors of the index closed in the green. The Energy Select Sector SPDR (XLE), the Consumer Discretionary Select Sector SPDR (XLY) and the Technology Select Sector SPDR (XLK) rallied 4.3%, 3.9% and 1.5%, respectively, while the Consumer Staples Select Sector SPDR (XLP) lost 0.8%.
The fear-gauge CBOE Volatility Index (VIX) was down 4.5% to 21.33. A total of 11.35 billion shares were traded Friday, higher than the last 20-session average of 10.79 billion. Advancers outnumbered decliners on the NYSE by a 2.92-to-1 ratio. On Nasdaq, a 1.44-to-1 ratio favored advancing issues.
“Technical” Recession Might Signal End of Fed Hawkishness
The U.S. GDP growth rate went down 0.9%, declining for the second straight quarter. The decline of the GDP growth rate over two consecutive quarters is generally considered a strong sign of recession. Although opinion is divided on whether this can actually be considered as the U.S. entering a recession, as other macro-economic factors suggest otherwise, investor sentiment prevails that this would urge the Fed to stop further monetary policy tightening.
Better-Than-Expected Earnings Season
Even though the earnings season has been mixed, the market has taken to it on a positive note because the concern was that it was going to be uniformly negative. Also, markets are upbeat on the fact that regardless of what the second quarter earnings are, many companies like Microsoft Corporation (MSFT - Free Report) and Amazon.com, Inc. (AMZN - Free Report) have painted a rosy picture for future guidance.
Tech stocks have been rallying this week based on strong earnings reports from big companies in the sector, while Energy stocks have risen on the basis of a surge in oil and gases prices. Consequently, shares of Chevron Corporation (CVX - Free Report) and Exxon Mobil Corporation (XOM - Free Report) gained 8.9% and 4.6%, respectively. Chevron carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Economic Data
According to a government report, Personal Income for June increased by 0.6% for the month of June, exceeding the Zacks Consensus Esmite of a 0.5% increase for the period. The revised estimate for May was pushed up to 0.6%.
Personal Spending for June increased 1.1% for the month of June, exceeding the Zacks Consensus Estimate of a 0.9% increase for the period. The revised estimate for May was raised to 0.3%.
Personal Savings Rate for June came down to 5.1% from the revised figures of 5.5% from May.
PCE Inflation grew by 0.1% in June against the revised figures of a 0.3% fall in the month of May. Core PCE inflation grew by 0.6% against a consensus of 0.5%, up from the revised growth of 0.3% in May.
As reported by the University of Michigan, Consumer Confidence increased to 51.5 in July compared to the consensus of 51.2. In June, it had come to 51.1.
Weekly Roundup
The three most widely followed indexes witnessed a strong rebound last week, providing some relief from the market's brutal sell-off this year. The tech-heavy Nasdaq notched a 4.7% gain last week, while the Dow Jones Industrial Average and the S&P 500 rallied 3% and 4.3%, respectively. Strong labor market data showing wage growth in a tight jobs market and strong earnings figures from tech behemoths like Apple and Amazon helped the rally in the stocks. A government report on Thursday showed that the U.S. economy contracted for the second straight quarter, suggesting that it was on the cusp of a recession. Although this outlook appears grim, it led to investor anticipation that the Fed would ease off on its monetary policy tightening.
Monthly Roundup
The Dow rose to a 6.7% gain for July, while the S&P 500 added 9.1% for the month. The Nasdaq Composite, albeit still in bear market territory, is up 12.4%. These are the biggest monthly gains for all three indexes since 2020. This is in stark contrast to the previous six months, which led to the stocks tumbling to their June bear market levels. Stocks did well in July as investors grew less apprehensive about the aggressive pacing of the Fed’s monetary policy tightening, and on the idea that inflation has perhaps peaked has started to settle in.