{"id":41823,"date":"2023-07-28T22:27:28","date_gmt":"2023-07-29T02:27:28","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/stock-market-gains-for-third-week-as-earnings-fuel-investor-optimism\/"},"modified":"2023-07-28T22:27:30","modified_gmt":"2023-07-29T02:27:30","slug":"stock-market-gains-for-third-week-as-earnings-fuel-investor-optimism","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=41823","title":{"rendered":"Stock Market Gains for Third Week as Earnings Fuel Investor Optimism"},"content":{"rendered":"
\n
<\/p>\n
<\/p>\n<\/figure><\/div>\n

Forget the Fed. Look past the data. There\u2019s just one thing that mattered to the market this past week\u2014earnings\u2014and they were darn good. Expect them to keep pushing stocks higher. <\/p>\n

Markets had a good week. The
\n S&P 500 index
\n rose 1%, to 4582, while the
\n Dow Jones Industrial Average
\n gained 0.7% to finish at 35,459. The
\n Nasdaq Composite
\n climbed 2%, to 14317.<\/p>\n

\n

The S&P 500 is now up 28% from its 52-week low reached on Oct. 12, and it hit a new 52-week high on Friday. That means it\u2019s bull market time. <\/p>\n

That might seem odd, particularly to the bears. Earnings, after all, are still so-so for S&P 500 companies, certainly not good enough to explain its big gains. With about half of the companies reporting, earnings are up about 3% from the previous year on average, lower than the 9% average growth reported in the second quarter of 2022. <\/p>\n

Yet things look just fine, with about 80% of the companies reporting better-than-expected earnings. While the majority typically beat earnings, that\u2019s a better rate than last quarter, when just under 80% did, and one year ago, when just under 75% did. <\/p>\n

\u201cEarnings right now are not collapsing,\u201d says BFR Research founder Brian Rauscher, adding that concerns he had about slowing earnings growth have been \u201cflushed out.\u201d <\/p>\n

There\u2019s certainly a chance that earnings don\u2019t stay this good and end up looking more like expectations coming into reporting season, when strategists were predicting profits to decline by 4%. Retailers have yet to report. If second-quarter earnings end up lower, it will be the second consecutive quarter of declines, marking an \u201cearnings recession.\u201d But that makes sense, given the level of differentiation among companies even in the same industry. <\/p>\n

\u201cIt\u2019s becoming more idiosyncratic because you\u2019re not getting a huge tailwind from either monetary or fiscal stimulus,\u201d adds Rauscher. \u201cYou are getting two names in the same space, one OK, one not so OK.\u201d <\/p>\n

Look at
\n General Electric
\n (ticker: GE) and
\n RTX
\n (RTX). Both make aircraft engines, but GE stock rose 6.3% after reporting earnings on Tuesday, while RTX stock fell 10% on the same day. The difference? RTX ran into quality issues with one of its aircraft engines. <\/p>\n

\n Taiwan Semiconductor Manufacturing
\n (TSM) and
\n Intel
\n (INTC) also went in different directions, with shares of the former falling 3.3% after reporting numbers on July 20, and the latter rising 5.7% on Friday. Intel\u2019s turnaround efforts, it seems, trumped cyclical concerns about the chip industry. <\/p>\n

It all points to a market that\u2019s far more complex now than is acknowledged. \u201cI\u2019ve stopped using the word \u2018market,\u2019 \u201d says Rauscher, noting that the equal-weight S&P 500 index is up only 9% year to date, trailing the standard S&P 500\u2019s 20% gain. <\/p>\n

Rauscher is looking for pockets of strength. He still likes Big Tech\u2014earnings from
\n Microsoft
\n (MSFT),
\n Meta Platforms
\n (META), Tesla (TSLA), and
\n Alphabet
\n (GOOGL) this past week were all strong, though not strong enough to lift all the stocks. <\/p>\n

That bodes well for quarterly reports from
\n Amazon.com
\n (AZMN) and
\n Apple
\n (AAPL), which are due on Aug. 3. Earnings from consumer-discretionary companies are growing fastest from a year ago. That, along with better-than-expected consumer confidence, bodes well for the sector in the second half of 2023. <\/p>\n

It\u2019s time to stop worrying about earnings. They\u2019re just fine, and more than enough to keep stocks chugging higher. <\/p>\n

Write to <\/strong>Al Root at allen.root@dowjones.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Forget the Fed. Look past the data. There\u2019s just one thing that mattered to the market this past week\u2014earnings\u2014and they were darn good. Expect them to keep pushing stocks higher. Markets had a good week. The S&P 500 index rose 1%, to 4582, while the Dow Jones Industrial Average gained 0.7% to finish at 35,459. […]<\/p>\n","protected":false},"author":1,"featured_media":41824,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-41823","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nStock Market Gains for Third Week as Earnings Fuel Investor Optimism | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Forget the Fed. Look past the data. 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