Why the S&P 500 rose for two weeks in a row
The S&P 500 rose about 0.5 percentage points last week to 5,128, marking the second straight week of gains for the large-cap index.
All major indexes rose last week, led by the small-cap Russell 2000, which rose 1.6% to 2,035. The Nasdaq Composite Index rose 1.4% to 16,156, and the Dow Jones Industrial Average rose 1.1% to 38,676.
Markets continued to advance Monday morning, again led by the Russell 2000 index, up nearly 1% in morning trading. Will the index continue its winning streak this week?
Fed spurs markets higher
It wasn’t good news from the Fed that lifted markets, primarily the Nasdaq and Russell 2000. Rather, it was more about the lack of bad news.
The Federal Reserve has taken no action or expected to take any action on interest rates since the Federal Open Market Committee (FOMC) meeting April 30-May 1.
However, when Federal Reserve Chairman Jerome Powell said in a post-meeting press conference that the Fed’s next action would not be an interest rate hike, the market received this positively. This has greatly eased concerns that interest rates could rise again in March as inflation rises.
As a result, markets rose, especially in small-cap stocks and the technology sector, which tend to be more affected by higher interest rates.
The other big news last week was the earnings results of two of the Magnificent Seven. apologize (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN). Amazon had a strong first quarter, with net sales up 13% and net profit up about 225%, driven by growth in Amazon Web Services. Amazon’s stock price soared about 4% last week.
Apple, the laggard among the Magnificent Seven, had a poor quarter, with revenue falling year-over-year, although it beat earnings estimates. But guidance for higher second-quarter sales and a massive $100 billion share buyback plan along with future product launches have given investors hope that the iPhone maker will bounce back.
This recovery began last week. Apple stock was one of the best-performing stocks in the S&P 500 last week, surging 8.3%.
Disney to report on Tuesday
The Magnificent Seven have all now released quarterly earnings results, and most have been strong. However, this strength did not necessarily translate into a rise for the overall market, as the S&P 500 and Nasdaq each fell about 4% in April, their first declines since October.
The Mag-7 company may be done posting its latest results, but there are other big names posting revenue numbers this week as well. walt disney (NYSE:DIS) on Tuesday. Disney was the best performer on the Dow Jones Industrial Average, up 26% year-to-date.
The company’s proxy challenge has now gained confidence among investors with improved cost management and streaming. Analysts are expecting a strong quarter, with sales up 18% year-over-year. Let’s see if the House of Mouse delivers.
Social media company again this week reddit (NYSE:RDDT) is scheduled to release its first earnings report as a public company on Tuesday. Meanwhile, semiconductor companies Arm Holdings (NASDAQ:ARM) and Allegro Microsystems (NASDAQ:ALGM) is scheduled to release its reports on Wednesday and Thursday, respectively.
Sponsored by Berkshire
The market may have rallied early Monday on the back of solid first-quarter results reported by Warren Buffett. Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) on Saturday.
Other support could come from hopeful expectations of upcoming speeches by Federal Reserve presidents in New York, Richmond, Virginia, and Minneapolis, Minnesota, scheduled for Monday and Tuesday. Investors are seeking more insight into interest rates and are hoping for good news.
