1-7-2023 (NEW YORK) U.S. stocks continued their upward trajectory, poised for further advancement as investors eagerly anticipated a flurry of earnings reports from major companies including Apple and Amazon. The Dow Jones Industrial Average climbed 100.24 points, or 0.28 percent, reaching 35,559.53. Similarly, the S&P 500 saw an increase of 6.73 points, or 0.15 percent, settling at 4,588.96. The Nasdaq Composite Index rose by 29.37 points, or 0.21 percent, closing at 14,346.02.
Of the 11 primary S&P 500 sectors, eight concluded the day in positive territory. Energy and real estate emerged as the top gainers, rising by 2.00 percent and 0.70 percent, respectively. On the other hand, health and consumer staples were the leading laggards, experiencing losses of 0.79 percent and 0.46 percent, respectively.
The month of July concluded on a positive note for U.S. stocks, with both the S&P 500 and the Nasdaq securing their fifth consecutive month of gains. As Wall Street commenced a busy earnings week, market participants refrained from making significant bets, expressing concerns about an overheated market.
Investors are now eagerly awaiting earnings reports from Apple and Amazon scheduled for Thursday. The earnings season has already surpassed its halfway mark, with more than half of the S&P 500 companies having reported their results. According to FactSet data, 64 percent of these companies delivered positive revenue surprises.
Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, expressed optimism, stating, “If they (Apple and Amazon) give really good guidance, we could see this bull market really continue to pick up speed and even see some momentum heading into the fall,” in an interview with CNBC. However, other analysts caution that the current bull market may be unsustainable. Matt Maley, chief market strategist at Miller Tabak + Co, warned, “Investors need to be careful about trying to squeeze every last penny out of this rally in the stock market over the coming days and weeks given that many of the best stocks are quite expensive,” in an interview with Bloomberg.
In addition to the highly anticipated tech earnings on Thursday, investors remain focused on Friday’s release of the nonfarm payrolls report. Many traders refrained from significant positioning until the report is published, as it is expected to provide insights into the tightness of the labor market. Edward Moya, senior market analyst at OANDA, commented, “The key for the payroll report might be what is happening with wages, as it seems fears of an acceleration of inflation have been downsized.”
Meanwhile, investors analyzed the findings of the Federal Reserve’s Senior Loan Officer Opinion Survey, released on Monday. The survey indicated tighter standards and weaker demand for commercial and industrial loans during the second quarter, providing evidence of the Federal Reserve’s impact on the economy through its tightening cycle. Edward Moya noted that the lag between the Fed’s tightening measures and their noticeable effect on credit conditions usually spans several months.
“The dollar softened following the release as the survey supports the narrative that the economy will steadily weaken and that should support rate cut bets for early next year,” Moya added.
