Technology and consumer discretionary stocks have led the market higher this week on the heels of better-than-expected earnings so far. Much to the surprise of many, companies like Netflix and Tesla reported much better quarterly results and gave better than expected outlooks for the second half of the year. Energy and oil investments have begun to trend lower, which is helping to fuel the recent rally in the markets. An article midweek even pointed to the possibility that we may have seen a peak in gasoline prices, at least for now. While Friday’s action was down, it has been somewhat reassuring to see buyers step back into the markets, particularly into the technology spaces. The other bit of good news is that we have now put some distance between the current levels and recent June lows. Let’s hope this trend sticks around for a while.
As we look towards next week, there is much to consider on the horizon. The Federal Reserve is meeting to determine the current state of affairs and evaluate the economic trends looming ahead. Additionally, more than 150 of the S&P 500 companies are slated to report earnings with the highly anticipated Apple outlook among them. We have already seen approximately 21% of the S&P 500 companies report thus far with nearly 70% of those beating Wall Street expectations according to research firm FactSet. This was much higher than anticipated and one of the catalysts for the strength we witnessed this week. Our view has long been that companies “right sized” their head count, built cash reserves, and generally cleaned up their balance sheets significantly during the last several Covid impacted years. With this current period of inflation lingering, we are seeing additional cost cutting measures put in place while also watching prices increase across the board. While this may not help you and I today from an expense standpoint, it is helping to sustain corporate balance sheets and therefore profitability. This should in turn allow our 401k’s and retirement accounts to begin clawing their way back from their year-to-date lows and begin a new period of growth. We may get knocked down from time to time, but we certainly know how to get back upright and move forward!
I hope your summer plans are in full swing, and you are able to relax with your loved ones. I will be taking a much-needed break myself next week, but we are fortunate to have Steven filling in with his own pearls of wisdom. Try not to be too hard on him! Have a great weekend.
The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.