Stock Market This Week (US): Big Tech earnings, GDP fall and Fed rate hike drive the markets
Stock Market This Week (US)
The US market started the week on a negative note but closed the week and the July month on a high. The Dow ended higher by nearly 3%, while the S&P 500 rose around 4.3%, and the Nasdaq Composite gained 4.7%.
US stock market this week: Stocks movement this week
The US market started the week full of earning reports on Monday in red. Investors waited eagerly for Fed meeting results and GDP numbers. The Tech stocks fell the most, and the energy sector was the best performing sector as energy prices rose.
US stocks fell on Tuesday as Walmart reported lower-than-expected earnings, which raised concern about consumer spending. Investors continued to wait for mega-cap tech earnings and economic data later in the week.
The US stocks rallied on Wednesday after the Federal Reserve announced an anticipated 0.75% point rate increase to fight inflation. Investors took Fed Chairman Powell's remark positively - he believes that the economy is currently not in a recession.
The US market continued its rally on Thursday even after the GDP data showed a second-straight contraction. US economic growth fell 0.9% in the second quarter. All major indices ended more than 1% higher.
US stocks continued the winning rally to the third consecutive day on Friday after strong tech earnings. Investors looked past concerns about the recessionary environment and high inflation. Amazon shares increased by more than 10%.
US stock market this week: Major events
Quarterly results: Google reported flat growth in both topline and bottom-line and misses estimates. Microsoft reported higher revenue and raised its outlook but missed estimates. Amazon revenue increased for Q2, and it was higher than analysts' expectations. Apple reported higher revenue and profit and the numbers were higher than estimated.
Best month for equity investors: July provided US equity investors biggest monthly gains since 2020. Dow rose to a 6.7% gain for July, S&P 500 added 9.1% for the month, while the Nasdaq Composite jumped roughly 12.4% though still in bear market territory.
Fed's rate hike: The Federal Reserve enacted its second consecutive 75 bps interest rate increase, taking its benchmark rate to a range of 2.25% - 2.5%. It was in line with what the market expected. Markets expect the Fed to start cutting rates by next summer, even though committee projections released in June show no cuts until at least 2024.
GDP Numbers: Gross domestic product fell 0.9% following a 1.6% decline in the first quarter. The drop came from multiple factors, including decreases in inventories, residential and nonresidential investment, and government spending. The second straight quarterly decline in GDP is a strong indication that recession is here.
Treasury yield: The yield on the benchmark 10-year Treasury note traded 2 basis points lower at 2.658%, and the yield on the 30-year Treasury bond fell 2 basis points to 3.017% to end the week and month.
Has the US entered into recession?
US economic growth fell 0.9% in the second quarter. It is the second consecutive quarterly fall. Hence, technically, the economy has entered into recession.
What is the unemployment rate in the US for June?
The unemployment rate stood at 3.6%, close to full employment in June.
Will the Fed increase the rate hike further?
The Fed has already raised the interest rate by 75 basis points for two consecutive months. It has also hinted that a similar move was possible again.