First Winning Week Since The Summer Thanks To The Wall Street Rally

Wall Street Rally

On Friday, October 28, most equities on Wall Street are up, led by Apple, Exxon Mobil, and other businesses that generated much greater summer earnings than anticipated. As investors hailed robust profits from Apple and other firms, technology stocks took the lead in a widespread surge on Wall Street Friday, capping another excellent week for the market.

Weekly Gain

The S&P 500 increased by 2.5%, marking its first consecutive weekly increase since August. The tech-heavy Nasdaq composite increased 2.9%, while the Dow Jones Industrial Average increased 2.6%. Stocks of smaller companies increased as well, increasing the Russell 2000 index by 2.3%.

According to Apple’s most recent quarterly reports, the iPhone manufacturer made even bigger earnings over the summer than was anticipated. Its shares increased 7.6%, spearheading a comeback in technology equities that had been primarily demolished the day before.

Despite reporting “worsening economic conditions,” Intel’s stock increased 10.7% after reporting significantly higher profits than experts had anticipated.

After exceeding Wall Street’s profit forecasts, Gilead Sciences and T-Mobile U.S. both saw gains of 12.9% and 7.4%, respectively.

A survey on consumer spending released a day after new data revealed the economy expanded marginally in the third quarter and inflation decreased, giving investors hope.

According to Quincy Krosby, chief equities strategist for LPL Financial, “you have an economy that virtually refuses to keel over, an economy that at its heart is strong, but at the same time inflation is dropping, and that is what the Fed wants, and that’s plainly what the market wants.”

This has fueled expectations on Wall Street for the Federal Reserve to “pivot,” slowing the significant interest rate increases that have jolted the market. Although many analysts claim that such hopes may be exaggerated, such a move might support the market.

The vast gains on expectations of a pullback appear premature, according to Liz Young, chief investment strategist at SoFi, because the central bank has been quite explicit about its plan to err on the side of going too far to manage inflation.

Young claimed that the rally had become somewhat unreasonable and weak.

To reach 3,901.06, the S&P 500 gained 93.76 points. To reach 32,861.80, the Dow increased by 828.52 points. To 11,102.45, the Nasdaq increased by 309.78 points. To 1,846.92, the Russell 2000 increased by 40.60 points.

Although the results are still distinctly divided, many large U.S. corporations have posted greater earnings than anticipated.

A 6.8% decline for Amazon on Friday was partially offset by solid profits and a weaker-than-anticipated sales projection from Amazon. The most recent Big Tech business suffered this week after dismal patterns were reported. After the group dominated Wall Street for years with a seemingly unstoppable growth, this is a startling turnabout.

Earlier this week, Meta Platforms reported a second consecutive quarter of declining revenue due to declining ad revenues and fierce competition from TikTok. As a result, the company lost over a quarter of its worth. The parent firm of Google and Microsoft also experienced slowdowns in essential areas.

This week on Wall Street, underperforming Big Tech stocks and the rest of the market have sharply diverged due to these problems. The Nasdaq recorded a 2.2% increase this week despite overflowing with high-growth tech stocks. If not for Apple’s bounce from Friday, it would have performed even worse. The Dow, on the other hand, increased 5.7% for the week because it places less emphasis on technology.

Big Tech company prices have been more negatively impacted by rising interest rates than the rest of the market, and the pressure continued on Friday as yields jumped.

According to Young, “the markets still don’t seem to want to think that we might reach a point where an earnings recession is feasible.”

The increases in pay and other compensation that American workers received over the summer were in line with expectations, according to data released in the morning. The Fed should continue raising rates sharply to undermine the labor market and reduce the high inflation rate in the country. Other data revealed that despite the Fed’s favored measure of inflation remaining very high, American families are still increasing their spending.

The Federal Reserve is attempting to prevent people and companies from making the purchases that inflation needs to remain high. It is doing this by purposefully slowing the economy and employment market. The concern is that it might go too far and trigger a sudden decline.

Fed Raised its Benchmark

The Federal Reserve increased its benchmark overnight interest rate from practically zero in March to 3% to 3.25%. The consensus is that it will push through a third hike that is triple the typical size the following week, maybe followed by a minor increase in December. In addition to slowing the economy, higher rates also drive down the value of stocks and other investments.

The yield on the two-year Treasury, which frequently corresponds to expectations for Fed action, increased to 4.42% late on Thursday from 4.28%.

Mortgage and many other loan rates are influenced by the 10-year yield, which increased to 4.01% from 3.93%.

Following a protracted legal dispute, Elon Musk assumed control of Twitter, and stock trading has since ceased.

 

Gloria Flynt

I am a Research Content Specialist in Update.co.ke. I have been working with update.co.ke for over 6 months. Update.co.ke is a digital platform that provides news and analysis on business, economy, technology and entrepreneurship in worldwide. I love reading and writing about anything that has to do with science, technology, and developments in the digital world.

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