In another volatile week, the markets latest winning week closed with a mixed finish on Friday following stronger profit reports than expected from several big US companies and more benign inflation news from the US this week.
Hopes for an easier Fed also helped stocks worldwide to strengthen, though markets abroad were also mixed on Friday. The MSCI World Equity index was little changed, staying at its peak for the year and its highest level since early 2022.
For the week, the Dow was up 2.3%, the S&P 500 rose 2.4% and the Nasdaq advanced 3.3%. The S&P 500 remains up 17% for the year to date.
Data showed on Wednesday U.S. consumer prices growing at their slowest pace in more than two years, and on Thursday the smallest increase in U.S. producer inflation in nearly three years. On Friday, the government reported that U.S. import prices dropped 0.2% last month, and U.S. consumer sentiment jumped to the highest level in nearly two years.
The US earnings reporting season is just getting underway, and Wall Street’s expectations are low. Analysts are forecasting the worst drop in earnings per share for S&P 500 companies since the spring of 2020. If they’re right, it would also mark a third straight quarter where profits sank.
Such expectations are key for financial markets, because one of the biggest factors that set a stock’s price is how much profit a company produces.
And a preliminary reading on a University of Michigan survey showed consumer sentiment at its highest level since September 2021, though lower-income consumers weren’t feeling as positive.
The big recent gains for stocks on Wall Street have some critics cautioning investors not to get carried away by hopes for what’s called a “soft landing,” where high inflation can be vanquished without a painful recession.
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