US stocks cap best month since 2020 as Amazon and Apple soar on earnings
A bear-market rally in July pushed the Nasdaq Composite up by more than 10%. Stocks also wrapped up the month with another Fed rate hike.
Patrick Fallon/AFP
- US stocks finished Friday's session higher as investors cheered quarterly results from Apple and Amazon.
- Major indexes in July notched their best monthly gains since late 2020.
- The closely watched PCE inflation gauge rose by a more-than-expected rate of 0.6%.
US stocks closed higher Friday, with earnings beats by Amazon and Apple helping the market notch its best monthly showing in almost two years while investors appeared to set aside a fresh reading on hot inflation.
The Nasdaq Composite and the S&P 500's information technology group each shot up as Amazon shares soared and Apple climbed in the wake of financial results. Amazon offered an upbeat outlook for third-quarter sales, and the iPhone maker said it fought through a challenging operating environment to keep quarterly sales on track.
The Nasdaq and the S&P 500 finished with their best monthly performances since late 2020, as the Nasdaq rose more than 11%.
"Markets continue to price a potential Federal Reserve 'pivot' into 2023, anticipating a reversal of rate increases as the economy slows. This has meant lower long-term interest rates, a boost to bond investors, and also higher stock prices, with secular growth companies such as technology and communications leading the way," Rob Haworth, senior investment strategist at US Bank Wealth Management in Seattle, told Insider in emailed comments.
Here's where US indexes stood at 4:00 p.m. on Friday:
- S&P 500: 4,130.29, up 1.42%
- Dow Jones Industrial Average: 32,845.13, up 0.97% (315.50 points)
- Nasdaq Composite: 12,390.69, up 1.88%
Stocks surged Friday even as the PCE Index, the Fed's preferred inflation gauge, rose 0.6% in June over the prior month, hotter than the Econoday estimate of 0.5%. The annual rate of 4.8% was the highest since 1983.
"We remain somewhat cautious on the future as markets move to reprice earnings growth as companies must battle high prices and high wages as well as ongoing supply challenges," said Haworth.
Around the markets, Bank of America said July's stock rebound found "oxygen" from falling Treasury yields - but the bear-market rally looks close to an end.
Billionaire investor Bill Ackman said the Fed needs to hike rates to at least 4% to get inflation under control.
The Japanese yen was on track for its largest monthly gain against the US dollar since 2020, with analysts pointing to investors' fears about weakness in the US economy. Meanwhile, Chinese investors have been stockpiling cash.
Oil prices advanced. West Texas Intermediate crude rose 2.1% to $98.41 per barrel. Brent crude, the international benchmark, kicked up 2.6% to $109.98.
Gold gained 0.5% at $1,778.40 per ounce. The 10-year Treasury yield turned lower, down 11 basis points to 2.66%.
Bitcoin fell 0.9% to $23,910.01.