FX168 Financial News Agency (North America) #US stock review# On Friday (July 26th), the market generally rose, including large technology giants and small stocks. This is different from most of this week. Several major companies announced better-than-expected earnings reports, and the Dow Jones Industrial Average closed up 650 points.
S&P 500 index rose 1.1% to 5399.22 points; Dow Jones index rose 1.63% to close at 40589.34 points; Nasdaq Composite Index rose 1.03% to close at 17357.88 points.
(Source: FX168)
(Source: FX168)
Inflation data
The US Department of Commerce said on Friday that the price of US consumer spending (PCE) in June was 2.5% higher than the same period last year, lower than the 2.6% inflation rate in May.
According to data from CME Group, as inflation recovered after the frustrating start of the year, traders continued to bet that the possibility of a rate cut by the Fed in September is 100%.
Brian Jacobsen, chief economist at Annex Wealth Management, said: "Slow income growth, slowing expense growth, commodity prices in deflation, and moderate inflation in service prices. If these cannot give the Fed confidence in lowering interest rates, then there is no way."
Market view
Sam Stovall of CFRA Research said that Friday's trend was driven by overselling sentiment, GDP reports that were stronger than expected on Thursday, and the Fed's view that it would begin to cut interest rates due to economic recovery.
"Today's PCE report performed well and helped the market out of the doldrums," he added. "With this correction, the big rotation is still ongoing, and the breadth is still on our side."
Craig Johnson of Piper Sandler said: "The major rotation from large-cap growth stocks to mid and small-cap value stocks is underway, and we believe this rotation will continue. Our breadth indicators confirm this violent shift, and technical evidence indicates that investors are reducing their concentration risk on the seven laggards and other large-cap leaders."
"We have seen the strong performance of small-cap stocks - a major rotation that has not been seen in decades," said George Maris, Principal Asset Management. "As returns may expand and recover, you will see People are more enthusiastic about these small-cap stocks. This rotation will have lasting power."
Financial report test
During this financial report season, the performance of the two super stocks this week was poor, causing the stock price to plummet.
Matt Maley of Miller Tabak + Co. said: "Entering August, the 'profit issue' may still be a more important issue. If this financial report season continues to put pressure on technology stocks, it is very likely that investors will start "rotating" cash instead of small stocks."
Quincy Krosby of LPL Financial said: "Next week, many large technology stocks will announce earnings reports, which will be a critical test for the market that is trying to find direction under mixed economic data and negative seasonal patterns in history."
Apple, Microsoft, Amazon, and Meta Platforms will all release their financial reports next week.
Bond market
After the inflation report was released, the yield on 10-year US Treasuries fell from 4.25% on Thursday night and 4.70% in April to 4.20%. This is a major move for the bond market and provides support for stock prices.
The strategist is bullish on the bond market in the second half of 2024. He believes that signs of economic slowdown will push investors towards stocks that have performed worse than expensive technology giants this year.
Focus stocks
Norfolk Southern's stock price rose 10.91%, wiping out losses so far this year, after the company reported better-than-expected profits for the latest quarter. The insurance payout related to last year's disastrous derailment in East Palestine also pushed up the company's share price. The company has also made progress in cutting costs and improving efficiency.
3M's stock price rose 23%, after the company announced both profits and revenue for the latest quarter were higher than analysts' expectations. The company, which owns the Scotch-Brite and Nexcare brands, also raised the lower end of its full-year profit forecast range for 2024.
Deckers Outdoors rose 6.32%, easily surpassing Wall Street's profit expectations with its strong performance in Ugg and Hoka brand shoes. This California-based company also raised its full-year profit forecast.
Newell Brands rose 40.54%, as the owner of Coleman camping supplies and Sharpie markers easily exceeded analysts' profit targets and the stock price soared.
DexCom fell by 40.66%. The latest quarterly profit reported by the diabetes care company was higher than expected, but its revenue was lower than analysts' expectations. Its revenue forecast for this quarter is also lower than analysts' expectations.