Best trading week since the end of June
Only lousy snap numbers spoil the mood of US investors
10/21/2022, 10:19 p.m
The reporting season for the third quarter in the USA has so far gone better than feared. The Dow Jones therefore celebrates its biggest weekly gain since the end of June. Only Snap’s bad advertising numbers dampen the buying mood as a bad omen.
With a tailwind from company balance sheets, the US stock exchanges rose at the end of the week. Of the Dow Jones Index the standard values ended the trading week 2.4 percent higher at 31,083 points – and thus celebrated the largest weekly gain since the end of June. The broader one S&P 500 climbed 2.3 percent to 3753 points. The index of the technology exchange Nasdaq rose by 2.3 percent to 10,859 points.
The third quarter earnings season has so far been better than feared, prompting analysts to raise earnings expectations for S&P 500 companies to 3.1 percent from the previous 2.8 percent. Hopes that the Fed’s interest rate path would no longer be quite as steep in the future also supported share and bond prices. The yield on ten-year Treasuries fell as a result and was 4.215 percent.
According to a report by the Wall Street Journal, some members of the US Federal Reserve want to downshift. “I would say the Fed is now trying to ease the scale or slow down its rate hikes, underscoring its price stability campaign,” said Joe Brusuelas, chief economist at consultancy RSM.
But traders are still expecting a fourth hike of 75 basis points at the central bank’s November meeting. Speculations of a sustained aggressive cycle of interest rate hikes have been weighing on stock and bond prices for some time. “There is still a lot of uncertainty about the economy, inflation and where interest rates will end up, and none of this is conducive to a strong sustained recovery in equity markets,” said strategist Craig Erlam of trading house Oanda.
Pfizer exults in higher vaccine prices
In the energy sector, surprisingly good quarterly results brightened Schlumberger the mood up. Shares gained more than 10 percent. In the wake of better-than-expected quarterly figures, investors jumped in dow to. The shares of the chemical company gained 4.3 percent. Also financials like JPMorgan Chase and Goldman Sachs increased by more than 4.6 percent.
The target of quadrupling the price of the Covid-19 vaccine in the US from Pfizer let investors speculate on the pharmaceutical giant’s ringing tills. Wells Fargo analyst Mohit Bansal expects sales to increase by $2.5 billion to $3 billion a year. Pfizer shares gained 4.8 percent. Partner’s titles Biontech gained 5.6 percent in Frankfurt. Also the shares of the competitors Moderna and Novavax increased by 8.4 and 12.5 percent.
Snap as a bad omen
Sluggish sales growth of Snap on the other hand, alienated investors. The Snapchat operator’s shares fell 28 percent. In the wake of this, the papers from online platforms such as Twitter and Pinterest up to 6.4 percent. Snap’s numbers pointed to falling ad sales, analysts at investment bank Piper Sandler wrote. This is a bad omen for companies that are also dependent on this income. The titles of the Facebook mother Meta fell 1.1 percent. The papers of the Google and YouTube operator alphabet increased by 0.9 percent.
It went down 1.6 percent American Express. The credit card company has built larger reserves to prepare for potential defaults if an economic downturn looms.