Both the S&P 500 and Dow Jones finished the week at record highs, jumping 0.4% and 0.5% respectively on Friday, taking the weeks gains to 1.4% and 1.2%.
This was the fourth straight week of gains for both markets, which have been supported by a flurry of highly positive economic data and what is looking like another solid round of quarterly earnings reports, flying in the face of the bears.
It seems the market is catching up with the Federal Reserve as the bond rate has fallen back towards 1.5%, supporting higher valuations. Traditional value sectors including energy and financials are seeing the lion’s share of capital flows.
Following on from the 18.3% Chinese economic growth which boosting weakening emerging market returns, capacity utilisation in the US, a measure of the amount of ‘slack’ in the economy, printed at 74.4 points – well below the 80 points that is seen as being inflationary.
How did popular US stocks fare on Friday?
- Disney (NYSE: DIS) – up 0.7%
- Amazon (NASDAQ: AMZN) – up 0.6%
- Microsoft (NASDAQ: MSFT) – up 0.5%
- Tesla (NASDAQ: TSLA) – up 0.1%
- Alphabet (NASDAQ: GOOGL) – down 0.1%
- Apple (NASDAQ: AAPL) – down 0.3%
- Facebook (NASDAQ: FB) – down 0.5%
- Zoom (NASDAQ: ZM) – down 0.7%
Morgan Stanley (NYSE: MS) was the latest investment bank to deliver record profits, reporting a 60% increase in revenue for the quarter and a 100% increase in profit to US$3.98 billion. Net interest income on its loan book added 49% as bad debts continue to normalise.
Buybacks are back in favour, with Morgan Stanley reporting it had repurchased US$2 billion in stock after restrictions were released.
Whilst these results are a positive for the financial sector, they are very much market-facing investment banks so have limited relevance for Australia’s Big Four.
Back home on the ASX, the S&P/ASX 200 (ASX: XJO) and All Ordinaries (ASX: XAO) are both expected to open higher on Monday. See Rask Media’s daily ASX 200 morning report.
