Friday’s gains helped the Dow post its best month in over a year, as investors cheered a rise in general industry optimism following better-than-feared earnings and hopes for a less-trigger happy Federal Reserve.
This past month was the best for all three major averages since November 2020.
Oil majors Chevron and Exxon Mobil pushed the energy sector higher by more than 4 percent after reporting stronger-than-expected financial results. Energy stocks were buoyed by rising oil prices and expectations that major oil producers would not raise production at their meeting next week.
Meanwhile, Amazon and Apple brought the curtain down on significant tech earnings with stronger-than-anticipated performance.
After reporting quarterly results that beat on top and bottom, Amazon shares rose by 10% despite a $3.9 billion loss from losses in its stake investment in electric vehicle maker Rivian Automotive.
Despite supply chain and China lockdown issues weighing on growth, Apple was up more than 3 percent after quarterly results topped estimates.
One analyst firm, Wedbush, described the quarter as “a major bullish statement on iPhone demand and Cupertino’s ability to navigate a supply chain shortage in an impressive performance.”
Stock in streaming device maker Roku dropped by 23% after the company painted a gloomy picture of the future, warning that a decline in ad spending and a weaker economic backdrop would likely reduce demand.
However, stocks in the semiconductor industry lagged behind the rest of the market as investors reacted negatively to Intel’s decision to reduce its guidance following the company’s worst quarterly revenue drop in more than a decade.
Amid the tech industry’s revival, a widespread belief has emerged that the Federal Reserve will be compelled policymakers are willing to slow the rate of interest rate increases if the economy is to avoid further damage from rising inflation.
Stifel warned that the risk of higher for more extended inflation, signaled by the PCE price index rising by more than expected 6.8 percent to a fresh 40-year high, could “undermine” the Fed’s dovish tone.
The Federal Reserve Board issued a statement earlier this week suggesting that it may slow the pace of tightening after September to reevaluate the effect of rate hikes on the economy and inflation.
After First Solar Inc. reported quarterly results that exceeded expectations, solar stocks were also in demand.
The climate spending bill negotiated by Senators Joe Manchin and Chuck Schumer is seen as a positive development for renewable stocks because it will increase funding for renewable energy research and development.
According to Report, the Dow has its best month since 2020, and significant technology companies continue to lead the pack.
