U.S. stocks have risen for six consecutive weeks and reached new highs. Whether they will continue to rise will be determined by the earnings reports of the Seven Technology Heroes.

  • Home   /  NEWS   /  
  • U.S. stocks have risen for six consecutive weeks and reached new highs. Whether they will continue to rise will be determined by the earnings reports of the Seven Technology Heroes.

U.S. stocks have risen for six consecutive weeks and reached new highs. Whether they will continue to rise will be determined by the earnings reports of the Seven Technology Heroes.

Comments Off on U.S. stocks have risen for six consecutive weeks and reached new highs. Whether they will continue to rise will be determined by the earnings reports of the Seven Technology Heroes.

As the U.S. stock market continued its upward trajectory on Friday, setting a record for weekly gains ahead of the 37th anniversary of “Black Monday,” the focus now shifts to the upcoming earnings reports. Over the next week, 20% of the companies in the S&P 500 will announce their quarterly results, with particular attention on Amazon and Tesla. Given the absence of significant economic data next week, the earnings outcomes will be crucial in determining whether the stock market can reach new highs.

The S&P 500 rose by 0.4%, marking its 47th record high this year, while both the S&P 500 and the Dow Jones Industrial Average achieved historic peaks, with weekly gains of 0.9% and 1% respectively, extending their winning streak to six weeks. The Nasdaq Composite saw an increase of 0.6%, with a weekly gain of 0.8%.

The Philadelphia Semiconductor Index managed to hold onto its gains, largely driven by NVIDIA’s new record highs, despite experiencing a 2.4% decline for the week. Meanwhile, TSMC’s ADRs reached historic highs before a 2.5% pullback on Thursday, culminating in a weekly gain of 5.3%.

Liz Young Thomas, the investment strategy chief at SoFi, commented, “Earnings season has kicked off, and while there have been some ups and downs, the overall outlook is still positive. We’re just getting started, and with the elections and Fed meetings coming up in the next few days, there’s more action ahead.”

Michael Hartnett, a strategist at Bank of America, noted that with the increasing possibility of Trump’s election and a Republican Congress, investors are beginning to position themselves in assets that performed well after Trump’s victory in 2016.

Looking at recent price trends, investors appear to be bolstering their stakes in banks, small-cap stocks, and the dollar—assets that led the gains back in 2016. Following Trump’s win over Hillary in November 2016, both the U.S. stock market and the dollar jumped significantly.

However, despite this recent optimism among investors, which has trended low this year, it could conversely serve as a bearish signal for the stock market. Historical patterns show that when such optimism arises in an election year, the stock market tends to perform modestly in the lead-up to Election Day, which is set for November 5 this year.

Ed Clissold, Chief U.S. Strategist at Ned Davis Research, stated, “The key takeaway is that the recent uptick in optimism may actually pressure the market ahead of this closely contested election.”

At the same time, Sam Stovall, the Chief Investment Strategist at CFRA, pointed out that the current market levels are stretched, with the S&P 500 trading at a price-to-earnings ratio that is 40% above the long-term average, while tech stocks exceed this by more than 60%.

To sustain such high valuations, the market will rely on more earnings surprises. Amazon and Tesla are set to be the highlights of next week, with Amazon also serving as a bellwether for the consumer discretionary sector in what can be seen as the prelude to a week full of major tech earnings reports.