New York: US stocks shook off early declines and closed out the last trading day of the month with modest gains on Friday as a rise in Microsoft helped offset declines in Amazon and Apple after disappointing quarterly earnings from the online retailer and iPhone maker.
Microsoft Corp’s shares closed at a record high of $331.62 and ended the session with a market capitalization of $2.49 trillion, surpassing Apple Inc’s market cap of roughly $2.48 trillion.
Apple lost 1.81 per cent after it warned the impact of supply-chain disruptions will be even worse during the current holiday sales quarter, while Amazon.com Inc declined 2.15% as it forecast downbeat holiday-quarter sales amid labor shortages.
“The takeaway from today is the resilience to the overall index despite 10 per cent of market cap in two companies disappointing and yet the market is flat. Its the resilience of the marketplace, it suggests to me the trend is still intact,” said David Joy, chief market strategist at Ameriprise Financial in Boston.
“Maybe the numbers were a surprise to the analyst community but not the reasons for the disappointment so there is still a general view that this is not business lost but business postponed and the trend in the economy and in the market continues to be to the upside.” The Dow Jones Industrial Average rose 89.08 points, or 0.25 per cent, to 35,819.56, the S&P 500 gained 8.96 points, or 0.19 per cent, to 4,605.38 and the Nasdaq Composite added 50.27 points, or 0.33 per cent, to 15,498.39.
The S&P 500 had fallen as much as 0.65 per cent earlier in the day.
Unabated rise
The benchmark index advanced 1.3 per cent for the week, its fourth straight weekly climb, marking its longest weekly streak of gains since April. For the month, the S&P rose 6.9 per cent, its biggest monthly rise since November 2020.
The Dow rose 0.4 per cent for the week while the Nasdaq gained 2.7 per cent, also marking four straight weekly gains for each. The Dow climbed 5.8% for October, its best monthly performance since March, while the Nasdaq jumped 7.3 per cent for its biggest monthly percentage gain since November 2020.
Apple had risen about 2.5 per cent while Amazon gained 1.6 per cent in Thursday’s session, helping to send the S&P 500 and Nasdaq to closing record highs.
With 279 companies in the S&P 500 having reported results through Friday morning, 82.1% have topped earnings expectations, according to Refinitiv data. The current year-over-year earnings growth rate for the third quarter is 39.2 per cent.
Market participants have been closely attuned to the ability of companies to maneuver through labor shortages, rising price pressures and clogs in the supply chain, and a solid earnings season has helped investors overlook a mixed macroeconomic picture with a Federal Reserve that is poised to begin to trim its massive bond purchases soon.
Fed factor
The central bank’s next policy announcement is on Nov. 3.
Data showed US consumer spending increased solidly in September, while inflation pressures are broadening.
The data indicated the jury is still out on whether the Fed’s “transitory” view on inflation will hold true.
AbbVie Inc advanced 4.56 per cent as the US drugmaker raised its 2021 adjusted profit forecast for the third time this year.
Starbucks Corp tumbled 6.30 per cent after the coffee chain said it expects fiscal 2022 operating margin to be below its long-term target due to inflation and investments.
For the month, the S&P 500 gained 6.9 per cent - its best showing since November, when stocks jumped more than 10 per cent in the wake of the presidential election in the United States and as drug companies reported promising results for their coronavirus vaccine candidates. The index rose 0.2 per cent Friday.
October’s rally came as investors shook off a number of concerns that had dogged Wall Street just a month ago. In September, worries that high inflation, slowing growth and supply chain logjams would lead to economic misery for US companies and consumers pulled the S&P 500 down about 4.8 per cent. It was the benchmark index’s worst month of 2021.
But improving prospects on several fronts fueled the rebound. Earnings reports from the country’s biggest companies overwhelmingly came in better than investors had expected, driving gains in a number of individual stocks. Of the 244 companies in the S&P 500 to report third-quarter results as of Thursday, 82% have done better than Wall Street analysts had forecast, according to the data provider Refinitiv.
Large technology stocks, whose sheer size gives them an outsize influence over bench marks like the S&P 500, rallied as well. Microsoft rose more than 17 per cent, and Alphabet climbed more than 11 per cent in the month after reporting solid financial results. And a deal to sell 100,000 of its electric cars to the rental company Hertz pushed Tesla’s stock value beyond $1 trillion for the first time.
As oil prices continued to rise, energy companies also profited. On Friday, Exxon Mobil and Chevron both reported a third-consecutive quarterly profit of more than $6 billion. Exxon Mobil’s shares climbed nearly 10 per cent in October, and Chevron’s gained close to 13 per cent.
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