Fed, Earnings, US Gvt Shutdown Power Stocks Higher
US stocks bounced back Friday, with Wall Street notching weekly and monthly wins as investors embraced strong earnings from Amazon (AMZN) that eased some doubts about prospects for Big Tech.
The Nasdaq Composite (^IXIC) rose 0.6%, while the S&P 500 (^GSPC) gained 0.3%, both restoring solid gains after wavering earlier in the session. The Dow Jones Industrial Average (^DJI), which includes fewer tech stocks, rose 0.1%.
All three major averages ended the month with wins, with the Nasdaq gaining more than 4% for a second month in a row. The tech-heavy index scored its seventh consecutive monthly victory, while the S&P 500 and Dow notched their sixth month of wins in a row. All three indexes ended with solid weekly gains, as well.
Fresh "Magnificent Seven" earnings reports rekindled optimism for sustained growth for tech megacaps, easing concerns about overspending on AI infrastructure.
Amazon shares rose around 10% and closed at an all-time high, after its third quarter results easily topped analysts' forecasts. In particular, its cloud division, Amazon Web Services, posted a 20% jump in revenue, signaling renewed strength in enterprise demand.
Apple (AAPL) also tapped its own record on the heels of stronger-than-expected results and upbeat guidance for the all-important holiday quarter. The stock hit a high above $277 shortly after the market open but quickly reversed direction.
Elsewhere in tech, Nvidia (NVDA) shares fluctuated as the company made a fresh push into South Korea, saying it would supply as many as 260,000 of its AI chips to companies and the country’s government. Meanwhile, shares in Netflix (NFLX) held onto gains after the media giant announced a 10-for-1 stock split.
Federal Reserve officials stepped up to speak for the first time since this week's meeting, which brought an interest rate cut and revealed deepening divisions among policymakers. Kansas City Fed president Jeff Schmid said he would have preferred to hold rates steady, as inflation is "too high." Dallas Fed president Lorie Logan, who is not a voting member this year, said Friday that she would have preferred to hold steady.
Traders are paring bets on a rate cut in December. Just over 60% now expect one, compared with over 90% one week ago.
Sean Conlon and Pia Singh of CNBC also report Nasdaq and S&P 500 close higher, thanks to Amazon, to cap off a strong week:
The Nasdaq Composite and the S&P 500 rose on Friday, boosted by shares of tech giant Amazon on the heels of its strong quarterly results.
The tech-heavy Nasdaq advanced 0.61% to finish the session at 23,724.96, while the broad market index gained 0.26% to reach 6,840.20. The Dow Jones Industrial Average closed 40.75 points higher, or 0.09%, to 47,562.87.
Amazon shares rallied 9.6% after the e-commerce giant said its cloud computing unit’s revenue increased 20% in the third quarter, exceeding Wall Street’s estimates. The company’s CEO, Andy Jassy, said that AWS is “growing at a pace we haven’t seen since 2022” and that AI and core infrastructure are experiencing “strong” demand.
“AI adoption is picking up, which makes the business investments in growing computing power and functionality of Gemini worthwhile. This will be a key metric going forward as we now have more than $600 billion in CAPEX spending committed for next year,” Brian Mulberry, client portfolio manager at Zacks Investment Management, told CNBC.
Those on Wall Street bought up shares of other AI-related names Friday on the heels of Amazon’s results. AI software firm Palantir rose 3%, while leading AI player Oracle gained 2.2%.
“Investors will be paying attention to how that spending comes back to each company in the form of growing AI sales,” Mulberry said.
Supporting the Nasdaq, streaming giant Netflix added 2.7% after the company announced a 10-for-1 stock split. Electric vehicle maker Tesla was also a winner, with shares seeing a jump of 3.7%.
Friday marked the end of a strong week, and month, for Wall Street. The S&P 500 gained 0.7% this week, while the Nasdaq and Dow climbed 2.2% and 0.8%.
October — which has experienced some of the largest one-day losses in stock market history — saw the S&P 500 climb 2.3%. The Nasdaq jumped 4.7%, and the 30-stock Dow advanced 2.5%. The Dow posted its sixth positive month in a row for the first time since 2018.
The US government has been shut down for 31 days as of today, basically the whole month of October and it's been a great month for stocks, especially tech shares.
Anyways, busy week with the Fed cutting rates by 25 bps this week but signalling further rate cuts are not assured.
It was also a massive earnings week and a lot of companies beat and rallied sharply.
Just check out the top performing US large cap stocks this week (full list here):
There were also some big declines as well this week (full list here):
But in general, this is another strong earnings season with most companies beating expectations, propelling stocks higher.
Just look at the full list of companies whose shares are making new highs, among them you have: Apple, Amazon, Bank of America, Celestica, Cisco Systems, Edward Life Sciences, First Solar, Corning, Palantir, Roku, Snowflake and plenty more.
Alright, Blue Jays vs Dodgers game 6 tonight, I'm rooting for Team Canada, Go Jays Go!!
Below, Fundstrat's Tom Lee joins 'Closing Bell' to talk November trading, the outlook for small caps and much more.
And Andrew Slimmon, Morgan Stanley Investment Management senior portfolio manager, joins 'Squawk box' to discuss the latest market trends, why he thinks the market has started to show signs of an increased level of speculation, his thoughts on the AI boom, and more.
Third, as investors make sense of surprising Fed guidance and a huge slate of earnings, what's the current state of sentiment around US equities — and which sectors could outperform into year-end? Shawn Tuteja, who oversees ETF and custom baskets volatility trading within Goldman Sachs Global Banking & Markets, discusses with Mike Washington.
Lastly, Paul Tudor Jones, Tudor Investment Corporation founder and CIO and Robin Hood Foundation founder and board member, joins 'Squawk Box' to discuss the latest market trends, state of the economy, his thoughts on the current bull market, state of the bond market, and more.
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