Friday, July 29, 2022

US Market Wrap 07/29/2022

- The stock market is coming to a close after a tumultuous week, with solid earnings from tech megacaps providing solace to traders concerned about the many crosscurrents rattling economies around the world.

- Following a disastrous first half, the S&P 500 had its best month since November 2020, while the Nasdaq 100 had its best month since April of that year. On Friday, big tech led gains, with Amazon and Apple soaring as higher revenues from the pair of iconic powerhouses offset concerns about profit slowdowns at a time when the industry is rethinking its staffing needs.

- Despite worrying signals from economic proxies such as Walmart and United Parcel Service, the earnings season as a whole has turned out to be brighter than expected, with roughly 75% of S&P 500 firms reporting results beating analyst estimates. This is fueling speculation that corporate America will be able to weather the perfect storm of high inflation, large rate hikes, and slowing growth.

- Two key US price gauges rose faster than expected, with the personal consumption expenditures index, which serves as the basis for the Federal Reserve's inflation target, rising at the fastest rate since 2005. Long-term inflation expectations among consumers remained high as well. Swaps revealed that traders increased their bets on a 75-basis-point hike in September, despite continuing to believe that a 50-basis-point hike was the most likely outcome.

- Fed Bank of Atlanta President Raphael Bostic stated that the US economy is "a ways" from entering a recession and that officials must raise rates further to keep prices under control.

- Despite this month's strong rebound in stocks, several market observers are sceptical of a sustained rally due to the numerous economic challenges and the fact that the market hasn't gotten cheap enough to call it a bottom.