After a gloomy start to the year, marked by the rise in inflation and the economic slowdown, the American stock markets are picking up.
The New York Stock Exchange ended Friday on a positive note its best month of the year, reinforced by results exceeding expectations and by the idea that the Fed will not have too heavy a hand to slow down the economy and the ‘inflation. According to final results, the Dow Jones index ended the session up 0.97% at 32,845.13 points, an increase of almost 7% over the month. The Nasdaq jumped 1.88% to 12,390.69 points, a jump of more than 12% in July. As for the broader S&P 500 index, it advanced by 1.42% on Friday to 4,130.29 points and by more than 9% over the month, its best monthly performance since November 2020.
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“This progress comes thanks to the positive results of certain large groups, including Apple and Amazon”summed up the Schwab analysts. “However Intel and Procter and Gamble both disappointed expectations and released frustrating forecasts that limited Dow Jones gains”, they added. The publications of the tech megacaps, Amazon and Apple, had indeed reassured Thursday after the close, with sales better than expected even if their net results were less brilliant. Amazon saw its stock soar 10.36% to $134.95 as its revenue rose 7% in the second quarter even as the online retail giant posted a related $2 billion loss to exceptional items.
“Advertising market contraction”
Also a Nasdaq heavyweight, Apple (+3.28%) saw robust demand for its iPhones but its profit fell in the second quarter. In contrast, Dow Jones member Intel plunged 8.56% after falling into the red in the second quarter and lowering its 2022 revenue forecast, citing a slowdown in global activity. Streaming access company Roku collapsed (-23.07%) as its management admitted not having expected “to the severity of the contraction of the advertising market”. Finally, consumer goods group Procter & Gamble (P&G) fell 6.11% after reporting disappointing annual financial targets.
P&G, which makes Gillette razors and Pampers diapers, among others, cited the negative impact of currency exchange rates, higher commodity prices and rising transportation costs as factors weighing on its growth. The American hydrocarbon giants ExxonMobil and Chevron have generated huge profits in the wake of rising oil prices this year. In the second quarter alone ExxonMobil earned $17.9 billion and Chevron $11.6 billion. On Wall Street, the title Exxon gained 4.74% and that of Chevron +8.90%. On the macroeconomic front, after the surprise of an American GDP down 0.9% in the second quarter published on Thursday, the Fed’s favorite inflation index confirmed for the month of June a marked acceleration in the rise in price, which may have peaked.
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The PCE index, based on consumer spending and the Central Bank’s preferred barometer for measuring inflation, climbed 6.8% from June 2021 and 1.0% from May, driven by the energy and food. For Edward Yardeni, of analyst firm Yardeni Research, “Investors appear to be betting on a mild recession and moderation in inflation that could end the US central bank’s (Fed) monetary policy tightening cycle sooner than expected.” The Fed had raised its key rates by 75 basis points on Thursday as expected and hinted that, if it intended to operate at other turns of the screw, it was also ready to slow them down if necessary. Restoring the hearts of investors, US consumer confidence improved a little in July while remaining very close to the all-time low reached in June. 10-year bond yields fell a bit to 2.64%, their lowest in four months.