Market Milestones: A Weekly Review of Financial Trends
The major stock indexes showed significant gains this week. The S&P 500 (SPX) rose for the sixth consecutive week, achieving a record high with an increase of 0.85%. The Dow Jones Industrial Average (DJIA) also reached an all-time high, climbing 0.96%. Additionally, the Nasdaq Composite (NDAQ) and the Nasdaq-100 (NDX) saw gains of 0.80% and 0.26%, respectively.
Breaking Records Amid Challenges
Stocks managed to recover from mid-week instability, driven by strong corporate earnings and positive economic indicators. This marks the seventh time in the past decade that the S&P 500 has achieved six weeks of gains. If this performance persists until year-end, it will signify two consecutive years of over 20% annual growth, a rare occurrence happening just five times in the last 75 years.
Tech stocks bounced back from a dip, helping to broaden the rally to include other sectors poised to benefit from the economy’s resilience and the Federal Reserve’s rate-easing cycle. Consequently, last week’s top-performing sectors in the S&P 500 included Utilities, Real Estate, and Financials. Financials capitalized on strong earnings reported by major banks, further boosting market confidence.
The Rise of “The Other 493”
As the Q3 earnings season progresses, companies outside the top tech firms are projected to see continued improvement. While much of the earnings growth is linked to the tech giants, analysts anticipate a second consecutive quarterly increase for the remaining “S&P 493” stocks.
According to Bloomberg Intelligence, the Magnificent Seven are expected to show an 18% growth in earnings, while the others in the index forecast a 1.8% increase. Notably, next year’s earnings growth for these other stocks is predicted to surpass double digits.
Furthermore, “The Other 493” are set to deliver more substantial positive earnings surprises than their tech counterparts, as their growth expectations are more attainable. This could enhance market sentiment and contribute to a broader rally.
Steady Economic Indicators
Last week, positive retail sales data and reduced jobless claims bolstered investor confidence. Consequently, market expectations for rate cuts this year have lessened, as the Fed appears to have room for further monetary easing, given ongoing weakness in manufacturing coupled with lower commodity prices that help keep inflation in check.
So far, 15% of S&P 500 companies have reported their Q3 earnings, revealing a promising average EPS growth of 6.7%, which surpasses Wall Street’s expectations. The Financial sector has been a major contributor to these results.
Following the strong results from JPMorgan Chase (JPM), Wells Fargo (WFC), and Bank of New York Mellon (BK), several large banks have also reported positive earnings. Names include Morgan Stanley (MS), Goldman Sachs (GS), Bank of America (BAC), and Citigroup (C), showcasing the strength of these institutions within the economy.
Stocks in the Spotlight
¤ Tech stocks experienced increased volatility tied to earnings, particularly after ASML Holding (ASML) cut its 2025 revenue guidance, leading to significant declines on Wednesday. However, a recovery followed, supported by strong performances from Taiwan Semiconductor and Netflix.
¤ Taiwan Semiconductor Manufacturing (TSM) shares rose nearly 4.5% after exceeding revenue and EPS expectations while providing strong fourth-quarter guidance, driven by rising demands for AI chips. This positive news revitalized optimism surrounding AI investments, benefiting stocks like Nvidia (NVDA) as well.
¤ Netflix (NFLX) saw a significant increase in its stock price after exceeding estimates for both revenue and subscriber growth. Furthermore, the company raised its full-year revenue outlook to the upper range of previous guidance.
¤ Apple (AAPL) shares rebounded sharply, closing the week higher, thanks to strong demand for its new iPhone models in China.
¤ Conversely, American Express (AXP) fell after releasing quarterly results that, despite an EPS beat, were hindered by missed revenue projections and unexpected credit loss provisions.
¤ Elevance Health (ELV) faced a steep decline, dropping over 14% after reporting lower-than-expected earnings and reducing its full-year profit forecast due to rising costs in its Medicaid segment.
Looking Ahead: Earnings and Dividend Announcements
The Q3 2024 earnings season continues, with several noteworthy reports expected this week.
Highlighting the week, Tesla (TSLA) will be the first of the “Magnificent” tech stocks to announce its earnings. Other significant releases include reports from GE Aerospace (GE), Danaher (DHR), Verizon (VZ), RTX (RTX), Lockheed Martin (LMT), General Motors (GM), Coca-Cola (KO), T-Mobile US (TMUS), International Business Machines (IBM), ServiceNow (NOW), AT&T (T), NextEra Energy (NEE), Boeing (BA), and L3Harris Technologies (LHX).
This week also marks ex-dividend dates for CVS Health (CVS), Caterpillar (CAT), Bank of New York Mellon (BK), Dell Technologies (DELL), Lowe’s (LOW), Fastenal Company (FAST), among others.
For more exclusive insights and analyses from TipRanks Macro & Markets research analyst Yulia Vaiman, click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
