U.S. stocks rallied on Friday to end a three-day winning streak and end the S&P 500’s best month since November 2020.
On Friday, the S&P 500 gained 1.4%, the Dow gained 1% and the tech-heavy Nasdaq added 1.9%.
Friday’s close also marked the last trading day of the month, with the benchmark S&P up 9.2% for July, while the Nasdaq gained 13% for the month. That rally marked the Nasdaq’s biggest monthly gain since July 2020.
The rally caps a month that saw inflation data hit another 41-year high, GDP contract for the second straight quarter and the Fed raise interest rates by 0.75%.
Investor expectations that slowing inflation and slowing growth could push the Fed to ease plans to raise interest rates bolstered stocks throughout the month.
“The biggest takeaway from this week’s events? Compelling and possibly decisive evidence that the ‘bottom is in’: the 2022 bear market is over,” said Tom Lee, managing partner and head of research at Fundstrat.
On Friday, gains in technology companies refocused giving the sector a boost heading into the weekend.
Amazon ( AMZN ) and Apple ( AAPL ) were among the day’s biggest gainers, with Amazon gaining more than 10% after a better-than-expected second-quarter earnings report Thursday night .
“Despite continued inflationary pressures on fuel, energy and transportation costs, we are making progress on the more controllable costs we referenced last quarter, notably by improving the productivity of our fulfillment network,” said Andy Jassy, CEO of Amazon, in a statement later. earnings.
With Friday’s recovery, Amazon shares nearly closed the gap it suffered after the company’s disappointing first-quarter report in late April. In July, Amazon shares gained 27%, their biggest monthly gain since October 2009.
Apple shares also rose on Friday, gaining just over 3% after a quarterly report that showed revenue rose to $83 billion in its fiscal third quarter, a company record for in the quarter
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“Our June quarter results continued to demonstrate our ability to manage our business effectively despite the challenging operating environment. We set a record for June quarter revenue and our installed base of active devices reached an all-time high across all geographic segments and product categories.” Apple CFO Luca Maestri said in a statement.
Apple CEO Tim Cook poses in front of a new MacBook Airs with M2 chip display during Apple’s annual Worldwide Developers Conference in San Jose, California, U.S., June 6, 2022. REUTERS/Peter DaSilva
However, things weren’t all positive on the tech front, with Roku ( ROKU ) shares losing 23.1% after disappointing quarterly results as the streaming player continues to deflate from their pandemic highs reached in early 2021. Roku shares are down about 85.% over the past 18 months.
Intel shares also fell sharply on Friday, falling 8.5% after a quarter that widely missed expectations on what CEO Pat Gelsinger called a “very strong economic swing.”
The market rally on negative news from individual companies shows how sentiment has changed in recent weeks.
Still, not all investors agree that this signals an “all clear” as traders continue to heal from the worst first half of a year since 1970.
“Right now, the market has recovered more than 10% from the mid-June lows,” said Keith Lerner, Trust’s chief market strategist. “But given the continued economic slowdown and earnings risks, our view is that the S&P 500’s near-term upside is limited to 3% to 6% (4200-4300) from its level current near 4070”.
“Close to the mid-June lows, we discussed that we would not sell stocks given how oversold the market had become,” Lerner added. “However, with the strong rally in equities since then and our view that near-term upside is limited, for those investors who are over-allocated to equities relative to their long-term objectives, this would be a more reasonable place to reduce exposure.”
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