S&P 500 and Nasdaq close at record highs after Netflix earnings, tech stocks and other factors.
The S&P 500, Nasdaq and other technology stocks ended the day higher Friday. This was largely due to a surge in Netflix stock shares fueled by earnings and wider gains amongst technology stocks.
The Dow Jones Industrial Average closed largely unchanged, a day after it posted a record-breaking closing high.
Netflix shares jumped after it surpassed Wall Street's estimates for new subscribers and stated that they expect to continue growing through the end the year.
The price of many of the Magnificent Seven technology stocks that have been driving Wall Street's rally in this year rose.
Apple grew after data revealed a sharp rise in the number of new iPhones sold in China. Meanwhile, Nvidia gained after BofA Global Research raised its price target for the stock.
Netflix's growth boosted the communication services sector, which was the biggest gainer of the 11 S&P sectors. Information technology also rose.
David Waddell is the chief executive officer of Waddell & Associates. He cited positive economic data, disinflation, and optimistic earnings and forecasts by corporate America.
The preliminary data shows that the S&P 500 rose 23.05 points or 0.39% to 5,864.52 while the Nasdaq Composite increased 115.30 or 0.63% to 18,488.91. The Dow Jones Industrial Average increased 37.96 points or 0.09% to 43,277.01.
American Express was the main culprit for the Dow's decline. The credit card company missed its quarterly revenue estimates.
The earnings season for financial companies has been generally positive. S&P Banks' index, however, slipped slightly and ended its five-win streak.
The positive economic data and the upbeat earnings from financial companies have contributed to the recent rise of three major indexes.
Stocks could be vulnerable to a drop due to stretched valuations. The S&P 500 trades at 22 times expected earnings, along with expectations of strong corporate results, and volatility surrounding the U.S. Presidential election on November 5.
David Waddell, of Waddell & Associates, noted that strong corporate earnings can override political concerns or concerns about overdone values.
He said: "We've gotten everything we can from multiple expansion. I think that the path forward depends entirely on earnings." "We are priced for very good earnings. It could cause a disruption if they don't come in, but absent a recession, I believe the bull is still intact."
Small-cap stocks attracted investors' buying in recent weeks, as both the Russell 2000 (small cap) and S&P Small Cap 600 (small caps) outperformed major indexes during the week. The Russell 2000 and S&P Small Cap 600 both fell on Friday.
The energy sector was the weakest among the S&P sectors. This was due to lower oil prices, and the decline of SLB following its earnings that were below expectations. Baker Hughes and Halliburton, who also provide oilfield services, were affected by this.
CVS Health's stock dropped after the company replaced Karen Lynch as CEO with David Joyner, a veteran of the company. It also retracted its profit forecast for 2024.
This news affected other health insurance companies, such as Cigna and Elevance Health.
The U.S. listing of Chinese companies rose after China's central banks launched funding schemes to boost the equity market.
According to economic data, the number of single-family homes started in September increased by 2.7%. The rate was 1.027 millions units on a seasonal adjusted basis.
(source: Reuters)
