On Thursday, markets experienced a turnaround after initially starting weak, with the S&P 500 closing higher by 0.9% and the Nasdaq Composite adding 1.5%. Tech companies that had already reported earnings, such as Alphabet, Amazon, Microsoft, and Netflix, saw gains, as did companies like Nvidia, which are set to report later in the month. After the market closed, Apple announced declining revenues, driven by sluggish iPhone sales, but also revealed a $110 billion stock buyback program, boosting investor confidence.
The rally on Thursday followed Federal Reserve Chairman Powell’s comments indicating a possible rate cut later in the year, as well as a weaker-than-expected employment report, which suggested a case for a rate cut in September. The report showed 175 thousand new jobs created, an unemployment rate of 3.9%, and average hourly earnings slightly weaker than expected, further supporting the potential for a rate cut. The CME currently predicts a better than 60% chance of a rate cut in September.
Investors are closely monitoring economic reports and earnings announcements, with companies like Coinbase reporting better-than-expected earnings after benefiting from a strong rally in the crypto space. Paramount Global saw shares rise after receiving a $26 billion all-cash offer from Sony Pictures and Apollo Global Management, while Peloton announced job cuts and a management change, causing its stock to fall. Commodities like oil, gold, and silver have also seen price declines recently, which, coupled with the employment report, may help alleviate concerns about inflation.
Looking ahead, premarket indicators are showing strong market performance, with S&P 500 and Nasdaq 100 futures up over 1% and 1.5% respectively. With volatility falling and a lighter economic calendar next week, markets are expected to remain strong. Despite ongoing uncertainties, sticking to long-term investing objectives and plans is recommended. The combination of positive earnings, Powell’s rate cut indications, and the employment report provide some optimism for investors. However, it is essential to continue monitoring market developments and making informed decisions.