U.S. stocks hit higher levels for a second straight week despite a flurry of earnings that sent investors down on shares of some of the world’s biggest tech companies.
The benchmark S&P 500 index closed 2.5% higher on Friday, bringing its weekly gain to 4%. The tech-heavy Nasdaq Composite was up 2.9%, up 2.2% on a weekly basis. Both indexes posted consecutive weekly gains for the first time since August.
Shares rose on Apple-backed Friday. Shares of the iPhone maker posted their biggest one-day gain in more than two years, closing up 7.6%, following it report Revenue of $90.1 billion in the September quarter, up 8% year over year. According to Refinitiv, this beat forecasts of $88.9 billion and compared with $83.4 billion a year ago.
Offsetting that, Amazon’s stock fell 6.8% after it warned late Thursday that consumer spending in “unexplored waters”. Big Tech Corporation, seen as instrumental in supporting the modern-day US economy, said it expects revenue to reach between $140 billion and $148 billion in the fourth quarter – $15 billion less than the previous quarter. analysts’ forecasts.
The announcement from Amazon extended a season of surprisingly weak earnings from major US tech companies, despite hopes that they would be more resilient amid a challenging economic backdrop. Shares of Microsoft, Alphabet and Facebook-owner Meta fell midweek as rising costs and slowing economic growth hit earnings.
Meta lost 23.7% for the week, while Amazon fell 13.3%.
Still, Jeff O’Connor, head of Americas market structure at Liquidnet, said money is likely to pour into equities once inflation and interest rates peak. “We are looking at cash levels for money managers at a level we haven’t seen in 20 years,” said O’Connor. “When money starts coming back into the stock market, it’s going to explode.”
The Federal Reserve has made accusations of tightening monetary policy aggressively this year in an attempt to curb inflation. The central bank raised interest rates by an incredibly large 0.75 percentage points at each of the three previous meetings to a target range of 3% to 3.25%. Markets are pricing in similar gains for November.
Data on Thursday showed that US economy expands 2.6% higher than expected on an annualized basis in the third quarter, after contracting in the first six months of the year. However, the headline figure hid the weakening of domestic consumer demand.
Meanwhile, the Fed’s preferred inflation gauge, the core personal consumption spending index, rose 0.5% month-on-month in September, matching economists’ expectations and falling from zero. 6% in August. The latest Employment Costs Index – which tracks employer spending to pay wages – also matched forecasts, rising 1.2% in the third quarter.
Joshua Shapiro, chief US economist at consulting firm MFR, said the ECI report “represents the Fed’s belief that the labor market remains overly tight and is contributing to increased pressure on inflation.” .
In the government bond market, the yield on the 10-year US Treasury note added 0.07 percentage points to 4.01% as its price fell. The yield on the 10-year German bond rose 0.11 percentage points to 2.1 percent.
The move comes a day after the European Central Bank raised interest rates by 0.75 percentage points in its second meeting in a row aimed at decelerating the rapid pace of price increases.
Elsewhere in stock markets, Europe’s Stoxx 600 closed 0.1% higher. Chinese stocks fell sharply, resuming a decline that began after President Xi Jinping tightened his grip on power at the Communist Party congress late last week. Hong Kong’s Hang Seng Index lost 3.7%.