Wall Street is maintaining its gains as hot stocks remain optimistic about the prospect of lower inflation. Major companies like Apple Inc (AAPL.O) and Amazon.com (AMZN.O) are planning to release their earnings on Thursday. Other well-known names like Western Digital Corp (WDC.O), Caterpillar Inc (CAT.N), Starbucks Corp (SBUX.O), and Advanced Micro Devices (AMD.O) also played the role.
The European shares also witnessed modest gains, supported by a fall in euro zone inflation in July, which is seen as a comforting sign for the European Central Bank (ECB) as it considers its next steps with interest rates.
Germany’s blue-chip stocks index hit a record high, and the European STOXX 600 index is on track for a second consecutive monthly gain.
The positive mood in markets comes after China’s manufacturing activity fell for the fourth straight month in July due to weak demand at home and abroad.
Positive Earnings Propel S&P 500 to Fifth Consecutive Monthly Gain
Global stocks, as measured by MSCI’s gauge of stocks across the globe, experienced a slight gain of 0.22%.
Florian Ielpo, head of the macro at Lombard Odier Investment Managers, pointed out the markets’ reaction. He found their feedback quite sensitive. Currently, investors are keenly analyzing new data.
An in-depth analysis of the eurozone report by Deutsche Bank’s senior European analyst Marc de Muizon revealed that while service prices remained resilient in the region, they weren’t as strong as expected during the peak tourism season in 2023.
This week, investors will closely watch economic indicators, including the U.S. ISM surveys on manufacturing and services, as well as the July payrolls report.
Hot Stocks: Market Sensitivity and Detailed Analysis Influence Investor Sentiment
Analysts at Citi market strategists believe that data this week will likely be consistent with the ‘soft landing’ narrative. However, they also highlight the potential for upside surprises in job growth. It could raise questions about the coexistence of slowing inflation and tight labor markets.
The U.S. stock indexes ended last week higher. Besides, they seem set to continue their upward trajectory this month as cooling inflation and a resilient economy boost investor sentiment.
The recent upbeat quarterly earnings from megacap growth companies, including Alphabet (GOOGL.O), Meta Platforms (META.O), Intel (INTC.O), and Lam Research (LRCX.O), have also contributed to the positive investor sentiment.
So far, almost 30% of the S&P 500 companies have reported their earnings for this week, and the results have been good enough to push the index’s rally to 10% since the beginning of June.
Dow Jones Industrial Average Logs Longest Winning Streak
The Dow Jones Industrial Average has enjoyed its longest winning streak in nearly four decades. The gains in sectors like healthcare, financials, and energy caused the prolonged streak. The industries had underperformed during the first half of the year.
The upcoming Bank of England rate decision is widely expected to see a quarter-point rate increase. In contrast, the Reserve Bank of Australia’s decision is more uncertain, with markets divided on whether they will hike or maintain the current rates.
In the currency market, traders are cutting back on bets for a continued rally in the pound ahead of the Bank of England rate decision.
The euro remains little changed against the dollar, and the Japanese yen weakened by about 1% versus the dollar.
Investors are still digesting the Bank of Japan’s (BOJ) decision to lift the lid on bond yields, signaling a shift away from ultra-easy policies. Any sustained rise in Japanese government bond yields could have ripple effects on other bond markets, potentially impacting global rates.
Hot Stocks: Investors Closely Monitor Bond Yields and Commodity Prices
Commodity markets show that spot gold added 0.4% to $1,967 an ounce. Oil prices are set to post their biggest monthly gains in over a year on expectations of extended output cuts by Saudi Arabia and a tightening of global supply.
The S&P 500 is poised for another month of gains. Hopes of cooling inflation are supporting the economy’s continued growth and potentially avoiding a predicted recession.
Although critics argue that the stock market rally may have occurred too quickly, tech hot stocks and beneficiaries of lower interest rates continue to rally.
Overall, the global economy is facing uncertainties and external headwinds. However, investors are carefully monitoring economic indicators and corporate earnings to gauge market sentiment and direction in the coming weeks.
