The S&P 500 had its best month since November 2020.

July proved to be the best month for investors in Wall Street stocks since November 2020, a rally fueled by better-than-expected financial results from some of America’s largest corporations and is betting that the Federal Reserve could cut its policy of limiting economy ahead of schedule.

The S&P 500 was up 1.4% on Friday, taking its July gain to 9.1%, the best month since the first announcements about an effective Covid-19 vaccine helped boost shares by almost. 11% in November 2020.

It’s a sharp change in tone after a particularly difficult stretch. Investor sentiment was bolstered by signs that some of America’s largest companies are managing to withstand the headwinds of the economy, including slowing growth and rising interest rates. This week, high-tech names like Apple, Microsoft, Amazon and Alphabet, whose size and performance have taken the stock market to new highs in recent years, have reported results that have relieved investors. Shares of all four were highest for the week and month.

At the same time, investors appeared to take comfort from the latest Federal Reserve meeting, interpreting the central bank as willing to slow the pace of interest rate hikes as the economy begins to cool. Rising interest rates raise costs for companies and weigh on profits, keeping investors in tune with the signs of easing in current Fed policy.

“Despite pockets of weakness, earnings did well,” said Alex Atanasiu, portfolio manager at Glenmede Investment Management. He added that although the Fed raised interest rates on Wednesday, longer-dated Treasury yields, which help establish borrowing costs around the world, fell along with expectations of further interest rate hikes. “and this strengthens the actions”.

Of the 278 companies in the S&P 500 that have reported earnings so far, 209 have exceeded analyst expectations, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.

Amazon’s stock price rose more than 10% on Friday following Thursday’s earnings report, adding about $ 140 billion to the company’s market valuation. Amazon is among the best-performing stocks over the past month, with an increase of over 27%. Due to its market value of around $ 1.4 trillion and the way the S&P 500 index is weighted, this move had a large impact on the performance of the index.

Only Apple, the largest company in the world with a market value of around $ 2.6 trillion, had a greater effect on the S&P 500 this month. Shares of Apple were up nearly 19% in July.

There were bright spots elsewhere too. European equities were up nearly 8% for the month, despite concerns about Italy’s economic and political health and growing fears of a natural gas shortage heading into the winter. In corporate bond markets, the debt of riskier junk-rated companies returned more than 5%, according to an index managed by Bloomberg, which recorded the best monthly performance since October 2011.

However, despite the good performance, some investors remain wary, warning that the recent rally could unfold just as quickly.

“I think we will go through a difficult period in the second half of the year, where economic data continues to show growth erosion and inflation may not fall as fast as we hope,” said David Donabedian, chief investment officer of the company. CIBC’s US private equity business.

The higher move reflects that the current round of updates from American companies is not as bad as it was feared, which is different from those results that are good. Investors pushed the S&P 500 lower by more than 8% in June, ahead of the current crop of earnings results, and the index remains around 14% below its January peak.

Some investors have also argued that there is a willingness to continue buying stocks while inflation is so high because other safer assets do not offer the returns that allow them to defend against the erosive effect of rising prices.

“I’m not as optimistic as the market seems to be,” said Lauren Goodwin, an economist at New York Life Investments. “But running for the hills when inflation is this high is just a drag on returns. We have to stay invested “.

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