Wall Street Update
Traders were busy on the New York Stock Exchange floor as the markets reacted to some mixed signals on Friday. The S&P 500 dipped slightly, down 0.2%, yet it’s still on track for its third consecutive week of gains. The Nasdaq Composite also saw a decrease of 0.4%, while the Dow Jones Industrial Average fell by 123 points, or 0.2%.
A notable drop was observed in Applied Materials, whose stock fell by 5% during the session, impacting the overall market sentiment.
This week has been historically significant for the S&P 500, which hit a record high above 7,800 for the first time on Thursday, reaching an intraday peak of 7,816.70. It even closed at a record high the previous day, which is quite an achievement.
Jay Hatfield from Infrastructure Capital Advisors shared that Friday’s market performance may hint at what’s on the horizon for August and September, especially following the S&P 500’s gains earlier in the week, which were driven by easing inflation concerns.
“Today feels like the start of a post-earnings settling period,” Hatfield mentioned during an interview. Interestingly, over 90% of S&P 500 companies have reported their second-quarter figures, showing around 50% growth in earnings compared to last year, according to FactSet.
The earnings season is winding down, with only a handful of major reports left. Hatfield noted that significant drivers seem to be lacking, apart from earnings reports and the situation regarding the Strait of Hormuz reopening.
He also projected that the S&P 500 could reach 8,100 by year-end if revenue growth maintains its current pace, the Hormuz situation stabilizes, and oil prices stay above $80, alongside the Federal Reserve keeping interest rates steady.
On another note, consumer spending is showing signs of weakness. Retail sales were lower than expected in July, and consumer confidence declined in August, reversing the upward trend from previous months.
Brett Kenwell, an investment analyst at eToro US, commented, “A weaker spending month doesn’t mean the economy is tanking, but when paired with disappointing GDP and job numbers, it’s hard to ignore that concern.” He added that this weaker data could alleviate some pressure on the Fed to increase rates.
However, he cautioned investors to be mindful of their wishes. “Economic weakness might seem like a fair trade-off to avoid a small rate hike. Yet, markets have largely dismissed those worries, and earnings continue to show strength. If the economy is to remain robust, consumers need to keep that momentum,” he said.
