Prices Rise on Wall Street for the Third Consecutive Week

Last week, stock prices on global exchanges rose sharply, thanks to solid corporate earnings and the loose monetary policy of central banks, leading to new record levels for the Dow Jones and S&P indices on Wall Street.

The S&P 500 index strengthened by 1.2 percent last week, reaching 1,633 points, while the Dow Jones, for the first time in history, broke above the psychologically important threshold of 15,000 points. Rising by 1 percent, it reached 15,118 points. The Nasdaq index, on the other hand, increased by 1.7 percent to 3,436 points.

The rise in prices on Wall Street for the third consecutive week is attributed to solid quarterly corporate earnings.

So far, about 90 percent of companies in the S&P 500 index have reported, with 66.7 percent exceeding profit expectations, which is above the average of 63 percent since 1994. However, only 46.4 percent of companies surpassed revenue estimates, which is below the average of 62 percent.

Although expectations were low, solid corporate results encourage investors. However, as the season for quarterly financial report announcements nears its end, market support weakens.

“When this season ends, there are no real fundamental reasons to buy stocks, so the market could take a breather,” says Bruce Zaro, a strategist at Delta Global Asset Management.

However, he does not expect a significant correction in stock prices downward as the market is supported by the loose monetary policy of the world’s largest central banks.

About ten days ago, the European Central Bank lowered key interest rates to stimulate economic growth, and last week, the Australian and South Korean monetary authorities did the same. The U.S. Fed, on the other hand, announced further stimulative monetary measures if necessary.

“As long as the series of solid corporate earnings reports continues and central banks around the world increase liquidity, the market will remain stable, at least in the short term,” says Michael James, a director at Wedbush Securities.

While some analysts expect further market growth, others believe a decline is imminent, as the situation in the world’s largest economies is not bright, despite the stimulative monetary policy, raising the question of whether the strong rise in stock prices since the beginning of the year is sustainable.

During this period, the S&P 500 has jumped more than 14 percent, and the Dow Jones about 15 percent. Analysts say it is very questionable whether the price rise can continue solely based on monetary policy.

“I think it will be difficult to exceed these levels in the short term. There are not many positive drivers for the rise to continue, and more or less all good news is already priced into the market,” says Natalie Trunow, a director at Calvert Investment Management.

Stock prices also rose on European exchanges last week. The London FTSE index strengthened by 1.6 percent to 6,624 points, while the Frankfurt DAX jumped 1.9 percent to 8,278 points, the highest level in history. The Paris CAC, on the other hand, increased by 1 percent to 3,953 points.

On the Tokyo Stock Exchange, the Nikkei index rose by 6.7 percent last week, marking its largest weekly jump since December 2009. It reached 14,607 points, the highest level in five and a half years.