Global Stock Markets Rise, Focus on Company Earnings

Global stock prices rose last week as inflationary pressures in Western countries gradually eased and a number of companies and banks reported better-than-expected quarterly earnings.

On Wall Street, the Dow Jones rose 2.1 percent last week to 35,227 points, while the S&P 500 strengthened 0.7 percent to 4,536 points. The Nasdaq index, on the other hand, fell 0.6 percent to 14,032 points.

Investor focus last week was on the earnings reports of companies and banks. Morgan Stanley, Bank of America, Goldman Sachs, US Bancorp, and several other banks reported better quarterly earnings than expected.

As a result, the S&P 500 index for the banking sector surged, reaching its highest level since early March, when the sector was shaken by the collapse of several banks.

An environment of elevated interest rates, a stable labor market, and economic growth is favorable for bank operations.

– All banks that have reported results so far have achieved higher profits and revenues than expected. Analysts have lowered their estimates, allowing banks to surprise positively – explains Tim Ghriskey, a strategist at Ingalls & Snyder.

On the other hand, the Nasdaq index fell last week as investors were disappointed by the earnings reports of several tech giants, such as Netflix and Tesla.

– The news from Netflix and Tesla is not the end of the world, but it gave investors reason to question whether it was wise to buy those stocks at such high prices. Therefore, some investors decided to pull money out of those stocks – says Ken Polcari, a partner at Kace Capital Advisors.

So far, more than 80 companies in the S&P 500 index have reported earnings, and most have exceeded analysts’ earnings estimates. In a Reuters survey, analysts estimate that earnings for companies in the S&P 500 index fell about 8 percent in the second quarter compared to the same period last year. At the beginning of the month, a decline of 5.7 percent was expected.

Market support is also provided by investors’ hope that the end of the interest rate hike cycle is near, given that inflationary pressures have been easing for months. At the June meeting, Fed leaders kept interest rates unchanged until the effects of the previous tightening of monetary policy on the economy and inflation can be assessed.

Analysts believe that the Fed will further raise interest rates by 0.25 percentage points at next week’s meeting. This may be the last increase in this cycle.

European stock prices also rose last week. The London FTSE jumped 3.1 percent to 7,663 points, while the Frankfurt DAX strengthened 0.4 percent to 16,177 points, and the Paris CAC rose 0.8 percent to 7,432 points.