U.S. stocks were slightly higher Friday morning, buoyed by well-received results from megacap technology stock Amazon.com and the latest batch of spending and inflation data.
However, the S&P 500 and Dow remained on track to fall for a second straight week, while the Nasdaq was poised for a third week of declines. All three indexes are on track to log their sixth weekly loss in eight.
What’s happening
-
The S&P 500
SPX
gained 8 points, or 0.2%, to 4,145. -
The Nasdaq Composite
COMP
gained 119 points, or 0.9%, to 12,715. -
The Dow Jones Industrial Average
DJIA
fell by 56 points, or 0.2%, to 32,729.
On Thursday, the Dow Jones Industrial Average fell 252 points, or 0.76%, to 32784, while the S&P 500 declined 50 points, or 1.18%, to 4137, putting it on the cusp of correction territory, which requires a drop of 10% from the most recent high.
What’s driving markets
Amazon.com
AMZN,
reported earnings that surpassed expectations which showed the company’s progress in lifting margins, both in its retail business and in cloud. Intel
INTC,
also beat estimates.
The earnings were another bright spot among the so-called “Magnificent Seven” companies after disappointing earnings from Tesla Inc. and Alphabet Inc., along with a weak report from Facebook parent Meta Platforms Inc.
“A combination of solid post-market U.S. tech earnings last night and less weak than expected industrial profits in China earlier this morning are helping lift global risk sentiment with stocks in all geographies trading in the green,” said Krupa Patel, head of international market intelligence at JPMorgan.
Overnight, China reported that industrial profits grew 11.9% year-over-year in September.
Investors also focused on the latest batch of U.S. PCE data, which includes the Federal Reserve’s preferred inflation gauge. According to the PCE price index, the cost of goods and services rose a higher-than-expected 0.4% in September. Core inflation, meanwhile, was in line with expectations.
The data showed consumer spending rose a sharp 0.7% in September, reflecting signs of spending strength previously reflected by retail-sales data.
Economists analyzing the data concluded that while the increase in spending looked favorable, the data also showed the spending came at the expense of falling savings.
The September personal income and spending data confirm that consumption growth remained strong at the end of Q3, entering the final quarter of the year with plenty of momentum,” said Michael Pearce, lead U.S. economist at Oxford Economics.
“However, the rise in spending has been funded entirely by falling saving, with real disposable incomes declining for a third consecutive month.”
Meanwhile, survey data from the University of Michigan showed consumer sentiment rose slightly at the end of October, while higher gas prices left them more worried about inflation.
The earnings news however wasn’t universally positive, with Ford Motor Co.
F,
withdrawing guidance, and Enphase Energy
ENPH,
becoming the latest solar company to issue a profit warning.
Crude-oil futures
CL.1,
rose after a U.S. strike on Iran-related facilities in Syria. West Texas Intermediate crude futures were up 0.8% at $83.81 a barrel recently.
“The one difficulty for the market today, going into the weekend, is concern that the situation in the Middle East could deteriorate and widen further considering a U.S. military strike against two Syrian structures, following attacks on U.S. troops in the region,” said Quincy Krosby, Chief Global Strategist for LPL Financial.
Companies in focus
-
Amazon.com Inc.
AMZN,
+8.43%
shares rose 5% in premarket trade after the e-commerce giant delivered a massive earnings beat. -
Intel Corp. stock
INTC,
+9.07%
jumped 8% after the chipmaker beat expectations for its third quarter and delivered an upbeat forecast for the current quarter. -
Ford Motor Co.
F,
-9.16%
dropped 4% after the automaker withdrew guidance, citing the pending agreement with the United Auto Workers, and revealed a $1.3 billion loss for its EV unit. -
Exxon Mobil Corp.
XOM,
-1.79%
lost 0.3% in premarket trading Friday, after the oil giant reported third-quarter profit and revenue that missed expectations as production fell, while free cash flow beat by a wide margin. -
Chevron Corp.’s stock
CVX,
-5.53%
fell 1.4% premarket Friday, after the oil giant posted third-quarter profit that fell far short of estimates.
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