Shares rise for best month since November 2020

US stocks rose on Friday, capping a three-day winning streak and ending the S&P 500 index’s best month since November 2020.

On Friday, the S&P 500 was up 1.4%, the Dow was up 1%, and the tech-heavy Nasdaq was up 1.9%.

Friday’s close also marked the last trading day of the month, with the S&P up 9.2% during July while the Nasdaq gained 13% over the month. The rally marks the Nasdaq’s biggest monthly gain since July 2020.

The rise was in a month that saw inflation data record a 41-year high, GDP held for the second consecutive quarter, and the Fed raised interest rates by another 0.75%.

Investors’ expectations that slowing inflation and slowing growth could prompt the Federal Reserve to soften plans to raise interest rates buoyed stocks over the course of the month.

“My biggest meal ready at this week’s events? Convincing and arguably 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, the focus was once again on technology company earnings which gave the sector a boost into the weekend.

Amazon (AMZN) and Apple (AAPL) were among the day’s biggest winners, with Amazon gaining more than 10% after Thursday night’s second-quarter earnings report that was better than feared.

Andy Gacy, Amazon CEO, said in a subsequent statement: “Despite continued inflationary pressures in fuel, energy, and transportation costs, we are making progress on the more manageable costs we flagged in the past quarter, particularly improving fulfillment network productivity. we’ve got”. profits.

With a rally on Friday, Amazon shares nearly closed the gap it suffered after the company’s disappointing first-quarter report in late April. In July, Amazon shares rose 27%, their biggest monthly rise since October 2009.

Apple shares also rose on Friday, rising just over 3% after a quarterly report showed total revenue of $83 billion in the third quarter of the fiscal year, a record for the company this quarter.

“June quarter results continued to demonstrate our ability to run our business effectively despite the challenging operating environment. We set a record for revenue in the June quarter, and our active installed hardware base reached an all-time high in every geography and product category.” Apple Chief Financial Officer Luca Maestri said in a statement.

Apple CEO Tim Cook poses in front of a new display for the MacBook Airs chipset powering the M2 during Apple’s annual Worldwide Developers Conference in San Jose, California, US, June 6, 2022. REUTERS/Peter DaSilva

Things weren’t all positive in tech, however, as Roku (ROKU) shares lost 23.1% after disappointing quarterly results as the streaming player continued to shrink from pandemic highs reached in early 2021. Roku shares fell nearly 85% over over the past 18 months.

Intel shares also fell significantly on Friday, falling 8.5% after a quarter that widely exceeded expectations for what CEO Pat Gelsinger called a “very sharp economic swing.”

The market rally in the face of negative news from individual companies shows how sentiment has shifted in the past several weeks.

However, not all investors share the view that this indicates “all clear” as traders continue to heal wounds from the worst first half of the year since 1970.

“At this point, the market has rebounded more than 10% from its mid-June lows,” said Keith Lerner, chief market strategist at the Trust. “But given the continued slowdown in the economy and earnings risks, our view is that the S&P 500’s near-term upside is limited to the 3% to 6% range (4200-4300) from its current level near 4,070.”

“Near the mid-June lows, we discussed that we wouldn’t sell stocks given how oversold the market is,” Lerner added. “However, with the strong rebound in equities since then and we have seen that the upside in the near term is limited, for those investors who are over-allocated to stocks relative to their long-term goals, this would be a more sensible place to scale back exposure.”

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