Wall Street’s main stock indexes closed higher on Friday, driven mainly by Amazon’s upbeat earnings forecast, although sentiment was hurt by fears that the Federal Reserve is becoming more cautious about cutting interest rates.
The S&P 500, Nasdaq Composite and Dow posted weekly gains and their longest monthly winning streak in years. Amazon shares rose sharply, closing up 9.6% after hitting an all-time high, following its forecast for quarterly sales above estimates. The online commerce and cloud services giant helped the consumer discretionary sector close with a 4% gain, its biggest daily gain since May 12.
However, in other large-cap companies, Apple shares closed down 0.4% after its iPhone Christmas quarter sales forecast, which beat Wall Street expectations, was clouded by CEO Tim Cook’s comments about supply constraints.
And in remarks that dampened investor expectations about possible monetary policy easing, Federal Reserve Bank of Atlanta President Raphael Bostic said Friday that a rate cut in December was not guaranteed, despite market expectations. Additionally, Federal Reserve Bank of Cleveland President Beth Hammack said she had opposed Wednesday’s rate cut because inflation remains too high.
On Friday, traders were pricing in a 65% chance of a rate cut in December, up from 72.8% on Thursday and 91.7% last week, according to the CME Group’s FedWatch tool.
Continue reading: Wall Street opens in green after results from Apple and Amazon
“Today’s theme is pretty similar to yesterday’s. Earnings are coming in a little better than expected, but are tempered by somewhat more hawkish comments from the Federal Reserve,” said James Ragan, co-CIO and director of investment management research at DA Davidson.
Jake Seltz, portfolio manager for Allspring’s Empiric LT Equity team, said investors “may have gotten ahead of themselves” in their bets on a rate cut.
Some supermarket stocks fell on Friday on concerns about a possible drop in November sales if federal food assistance benefits, known as the Supplemental Nutrition Assistance Program (SNAP), are interrupted by the ongoing government shutdown.
Two federal judges ruled Friday that President Donald Trump’s administration cannot suspend food aid for millions of Americans during the shutdown, saying the government must use contingency funds to finance the benefits. However, Kroger shares fell 2.8%, while food supplier Conagra Brands lost 1.3%, and Walmart finished down 1%, despite the rulings.
The Dow Jones Industrial Average rose 40.75 points, or 0.09%, to 47,562.87; The S&P 500 gained 17.86 points, or 0.26%, to 6,840.20, and the Nasdaq Composite rose 143.81 points, or 0.61%, to close at 23,724.96.
For the month, the S&P 500 added 2.27%, notching its sixth consecutive monthly gain, the longest streak since August 2021. The Nasdaq Composite gained 4.7% in October, closing a 7-month winning streak, the longest since early 2018. The Dow rose 2.5% for the month, for its sixth consecutive monthly gain, the longest since January 2021. 2018.
For the week, the S&P 500 rose 0.7%, while the Nasdaq gained 2.24% and the Dow advanced 0.75%.
Of the 315 S&P 500 companies that have reported third-quarter results so far, 83.2% have surpassed analyst estimates, according to data from LSEG. This is well above the historical average, where approximately 67% of companies beat forecasts.
With a lack of economic data from the government due to the extended shutdown, Kim Forrest, chief investment officer at Bokeh Capital, said investors were focused on earnings reports. “The government is not giving us the data that we have become dependent on, so we are using companies, as we should, for guidance on how the economy is doing,” he said.
In other moves, Warner Bros. Discovery rose 8.7% following a Reuters report that Netflix was actively exploring a bid for the studio and the company’s streaming business.
Netflix rose 2.7% after announcing plans for a 10-for-1 stock split.
Western Digital closed up 8.7% after hitting an all-time high, after forecasting quarterly profits above Wall Street estimates. Shares of solar panel maker First Solar rose 14.3% after beating sales expectations for the third quarter.
With information from Reuters.
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