(DJIA) rose on Friday, boosted by gains in the Home depot (NYSE: ) and caterpillar (NYSE: ), as investors began to look beyond the technology sector’s top performers. The Dow climbed 247.15 points, or 0.62%, to close at 40,000.90, hitting a new all-time high of 40,257.24 during the session.
It also rose, gaining 0.55% to close at 5,615.35, while it rose 0.63% to end at 18,398.45.
On Thursday, the S&P 500 experienced its worst day since late April due to a significant market rotation away from Big Tech, with Nvidia (NASDAQ: ) falling 5.6%.
Despite the selloff in other major indexes, the Dow managed to rise 0.08%. For the week, the Dow advanced 1.6%, boosted by a report on Thursday showing a 0.1% decline in the consumer price index (CPI) for June.
This week, the focus will shift to earnings season, as economic data and central banker speeches will be relatively light. However, market participants will keep an eye on economic reports for insights into future Federal Reserve policy decisions.
The most prominent event to watch is the June retail sales report on Tuesday.
“We forecast retail sales fell 0.3% million in June,” Morgan Stanley economists said in a note.
“Softer payrolls, commodity deflation and a drop in auto sales, likely impacted by the cyber attack, are likely weighing on sales. Core sales down 0.5% million. Our forecast is in line with 2Q24 real consumption growth at an annual rate of 1.4%.
Additionally, June industrial production and existing home sales data will be released on Wednesday.
J&J, Netflix and banks will report earnings this week
However, much of the market’s attention will be directed toward the second-quarter earnings season, which began last week.
Wall Street banks were the first to report. While JPMorgan and Citigroup are among the worst performers in the S&P 500 today, both banks posted second-quarter earnings that beat expectations.
Citi reported revenue of $20.13 billion, beating estimates of $20.11 billion, and net income of $3.03 billion, which was 11% higher than the $2.72 billion estimate. JPMorgan’s results were even better.
This week, several companies are expected to be in the spotlight, most notably Johnson & Johnson (NYSE: ) and Netflix Inc (NASDAQ: ), due to report earnings on Wednesday and Thursday, respectively.
Morgan Stanley, Bank of America, ASML (AS:) and American Express (NYSE: ) will also reveal their latest quarterly performance data.
What analysts are saying about US stocks
JPMorgan: “The historical spread between the performance of the S&P500 and the SPW is extreme. Given this, it is likely that the divergence will peak, but this may happen through the stalling of winners rather than the accumulation of laggards. After last week’s good CPI print, SPW is bouncing back, but we fear the conditions for a sustained rally are not there and look for subsurface consolidation to continue over the summer.”
RBC: “The thing we’re most interested in getting color on is whether earnings dynamics will give US equity investors a reason to continue the rotation that appeared to have started (again) last week away from Growth, Large and Mega Cap, in Value, small cap and everything else. As we discussed in Strategy Spotlight earlier this month, valuations and positioning have set the stage for an eventual rotation to new leadership. But that’s been true for quite some time, and we’ve had a few false starts. The bases must cooperate. Greater confidence around Fed tapering coming soon is clearly helping to support the return to small-caps, and we confess that we came out eating more comfortably on small-caps last week.
Evercore ISI: “The US economy slowed but recession was avoided in 2012 and 2015-6, and stocks became more volatile but soon resumed their upward trajectories. In 2024, absent signs of an impending recession, the SPX remains on track for 6,000. , trading at a below-average premium to the S&P 500, is expected to outperform as the Fed is poised to cut to support growth. Small is beautiful.”
Yardeni Research: “We expect equity investors to focus on the second quarter earnings reporting season during the rest of this month through early August. If earnings turn out to be better than expected (as we project), then the bull market should extend as investors continue to discount cuts in the federal funds rate later this year, as they did on Thursday and Friday. The breadth of positive three-month forward earnings growth rates among S&P 500 companies continues to widen.”
Bank of America: “The big question in the market is ‘is growth slowing too much?'” But subdued inflation means the Fed can focus solely on growth, putting the Fed in a much better position, especially after 5 hikes, 25 ppt The stars are aligning for rate-sensitive cyclical rotation: rate pressure is easing, growth would eventually be supported by the Fed, and more importantly, earnings are expanding as the other 493 emerges from an earnings recession .