The three major stock indexes of the U.S. ended on a positive note at the end of July. Investors are optimistic about driving factors of the stock market performance, which are the signs of cooling performance and a resilient economy. The driving factors increase the expectation of the country’s soft landing.
Overall status of the Stock Market
The major three stock indexes of the U.S.: the Dow Jones Industrial Average (DoW), the S&P 500, and the Nasdaq Composite all ended higher last week. This boosted the investor’s confidence with encouraging economic indicators. Added to this, the cheerful quarterly earnings from Megacap growth companies such as Alphabet, Intel, Meta Platforms, and Lam Research, have further increased the confidence associated sentiment.
Even though the overall stock market condition is good and optimistic, according to the data from Refinitiv, the Q2 earnings of the S&P 500 are estimated to fall 6.4% year-over-year. However, this prediction represents a hike from last week’s forecast of a 7.9% drop, giving hope for potential recovery and market growth.
Stock Market Investors, and analysts expecting soft landing
The blue-chip Dow has achieved a notable standout-, which means it achieved the longest winning streak after four decades. The success of Dow is achieved with the gains got by previously underperforming domains like healthcare, financials, and energy this month.
Joshua Warner, the stock market analyst at City Index, his words about the current market condition is “Markets are growing increasingly confident that we are approaching the end of the current rate-hike cycle and that a soft landing can be delivered,”
He also added that the future trajectory of earnings and interest rates is tightly dependent on macroeconomic factors, and conditions. Surely, data will play a significant role in sculpting market sentiment.
Later in the same day, investors are clearly waiting for the remarks from the member of the Federal Open Market Committee, Chicago Fed President Austan Goolsbee. The future direction of the stock market is highly likely influenced by the insights from Federal Reserve’s policy
Waiting for the reports of big tech giants
In the way of giving a possibility of a soft landing, Citigroup raises its target for year-end and mid-2024 for the S&P 500 to 4,600 and 5,000, respectively. The S&P 500 completed at 4,582 last week. The optimistic look of the bank is because of the favorable economic data and the Megacap company’s recent sturdy performance.
As this month is going to end, investors are eagerly expecting quarterly reports from the big shots Amazon, Apple, and AMD. Not only this, but they are also paying attention to the reading of the July ISM manufacturing and three pairs of employment data, including a highly expected report of July non-farm payrolls.
Few companies have reflected the signs of early success in premarket trading. The financial service SoFi Technologies, rose 7.2% and reported a better quarterly revenue. Chipmaker ON semiconductor also hiked 2.2% ahead of its Q2 results.
The second effort by Johnson & Johnson (J&J) to settle the tens of thousands of claims involving their talc products was denied by a U.S. judge, which caused the corporation to suffer a setback. J&J’s shares decreased by 1.4% as a consequence.
Following Morgan Stanley’s downgrading of the business software provider’s rating, Salesforce saw a 1.7% fall. In a similar manner, UPS fell 1.3% when Credit Suisse cut its rating.
Bottom Line
Despite these individual corporate changes, the general stock market outlook is still positive as investors watch for the next earnings reports and economic data in order to gain more insight into the direction the economy will take going forward and the Federal Reserve’s monetary policy. As July draws to a close, all eyes will be on the stock market’s performance in the months to come and if the encouraging trends will continue to underpin investor confidence.
