On Thursday, the markets experienced a turnaround with the S&P 500 closing higher by 0.9% and the Nasdaq Composite adding 1.5%. Tech giants like Alphabet, Amazon, Microsoft, and Netflix saw higher trading numbers, with companies like Nvidia also posting solid gains for the day. Apple, which reported declining revenues for the fifth time in six quarters, announced a $110 billion stock buyback program after the close. This news sent index futures higher, along with the release of a weaker than expected employment report early Friday morning.
Investors were reassured by Fed Chairman Powell’s comments earlier in the week hinting at a possible rate cut later in the year, especially after the release of disappointing employment numbers. Analysts had predicted 238 thousand new jobs and an unemployment rate of 3.8%, but only 175 thousand new jobs were created, pushing the unemployment rate up to 3.9%. With hourly wages growing slightly weaker than expected, there is speculation that the Fed may cut rates in September, as there is currently a better than 60% chance of this happening according to the CME.
In addition to economic reports, investors are contending with a slew of earnings announcements. Coinbase reported better than expected earnings, marking its first profit in two years, despite a recent pullback in the cryptocurrency market. Paramount Global saw a 13% increase in shares following an all-cash offer from Sony Pictures and Apollo Global Management. Peloton’s stock fell 2.8% after the announcement of CEO Barry McCarthy stepping down and further job cuts, indicating ongoing struggles in the company.
Commodities like oil, gold, and silver have seen price decreases in recent weeks, which should help alleviate concerns about inflation. Oil prices have fallen 9% since early April, while gold futures and silver prices have also dropped significantly. Pre-market activity is showing strong numbers with S&P 500 futures up over 1% and Nasdaq 100 futures higher by over 1.5%. With earnings reports and economic data being positive, markets are expected to stay strong for the day as volatility falls by 6% with the VIX below 14.
Looking ahead, next week is expected to be another heavy week of earnings, but most major players have already reported. The economic calendar is lighter, which should contribute to continued market strength. Investors are advised to stick to their long-term objectives and investing plans amidst the positive market performance and economic indicators, as highlighted in the recent earnings reports, Powell’s comments, and the employment report.
