22-7-2023 (NEW YORK) Stock markets in the United States closed with mixed results on Friday, as investors weighed up a range of corporate earnings results. The Dow Jones Industrial Average edged up by 2.51 points, or 0.01 percent, to 35,227.69, while the S&P 500 rose by 1.47 points, or 0.03 percent, to 4,536.34. However, the Nasdaq Composite Index fell by 30.50 points, or 0.22 percent, to 14,032.81.
Of the 11 primary S&P 500 sectors, six ended the day positively, with utilities and healthcare leading the way, rising by 1.50 percent and 1.01 percent, respectively. Communication services and industrials led the laggards, losing 0.50 percent and 0.46 percent, respectively. Meanwhile, the materials sector remained unchanged.
Following Thursday’s Nasdaq selloff, markets have stabilized, with the Dow logging its tenth straight day of gains and the S&P 500 posting weekly gains.
Investors were keeping a close eye on corporate earnings, with CSX seeing a 3.71 percent drop in its share price after the transportation giant missed revenue expectations in its second quarter. American Express also disappointed, with the company’s shares falling by 3.92 percent after posting lower-than-expected revenues. Advertising company Interpublic Group was the S&P 500’s worst performer, tumbling by 13.32 percent after cutting its growth forecast.
While around 75 percent of S&P 500 companies that have reported Q2 earnings results have exceeded analysts’ expectations, the overall earnings outlook is not favourable, according to FactSet data.
“The current market is priced for perfection. When a company comes out, beats, and guides higher, it still can go down if there are any concerns or worries,” said Louis Navellier, chairman and founder of Navellier & Associates, adding that investors are now looking ahead to more corporate earnings and the Federal Reserve policy meeting next week.
The Nasdaq-100 is also undergoing a rebalancing process, as some of the biggest tech companies have grown too large. Portfolio managers are recalibrating their funds to account for the rebalancing, fuelling volatility in Friday’s trading.
The Federal Reserve is expected to resume raising rates at the July 26 meeting, with Fed funds futures indicating a 96 percent chance that the central bank will deliver a quarter-point rate rise, bringing the target range to between 5.25 percent and 5.50 percent, almost a 22-year high. Senior market analyst at OANDA, Edward Moya, said that “this seems like it will be the last rate hike in the Fed’s tightening cycle, but we will have two more inflation reports before the Fed will need to commit that more rate hikes are no longer necessary.”
