Quick overview
- The Dow Jones Industrial Average rose 222 points on Friday, recovering from a significant drop the previous day.
- Both Alphabet and Tesla reported earnings this week, but their stocks fell due to concerns over future spending and profit margins.
- The Nasdaq and S&P 500 saw slight increases, driven by fluctuations in the semiconductor sector, particularly Intel’s 4% rise.
- Ongoing tensions in the Middle East are contributing to rising oil prices, which may hinder stock market growth as investors remain cautious.
The Dow Jones Industrial Average climbed 222 points on Friday, gaining 0.4% as it recovered from a bearish previous session marked by stock drops from megacaps reporting for the quarter.
Megacap stocks Alphabet (GOOGL) and Tesla (TSLA) both reported their earnings this week, and while Alphabet posted better than expected revenue, their stock fell on their capex forecast. Tesla stock lost more than 14% after reporting a sharp decline in profits despite climbing sales. The Dow fell off hard on Thursday but started to recover Friday.
The Nasdaq ticked up 0.1% on Friday, and the S&P 500 added just 0.2% as chip stocks again showed strong fluctuations. The semiconductor sector is the driving force behind Nasdaq and S&P fluctuations recently, and Intel’s (INTC) 4% increase helped premarket trading look better on Friday morning.
Slight Recovery for Stocks as Week Ends
The final day of trading for the week shows stabilizing oil prices after the rates spiked the previous day. Fighting in the Middle East continues to cause price surges in the crude oil benchmarks, pushing Brent crude up to $85.84 per barrel. The cost of oil will hold back stock market growth so long as investors are worried that they may not have enough money to cover rising gas costs and invest as they would like into risky assets.
Both Tesla and Alphabet stocks saw a sharp decline this week. They both beat expectations, but both companies saw profits drop off and expect to spend tremendous amounts of money to grow their business moving forward. That creates a tough situation for shareholders who are expecting priority to be placed on profit margins.
The Dow dropped more than 500 points the previous day, but the stock index is lifted by better performances this morning from chip stocks. Since those stocks declined on Thursday, they should start to make upward progress today. This part of the market has been fluctuating wildly in recent weeks as investor sentiment swings back and forth. Massive earnings are pushing against poor profit margins, and high capex spending is fighting against strong future prospects, creating a market that constantly shifts.
The market has not opened at the time of writing, so investors still have opportunity to invest in rising chip stocks early on in the day. We expect good performances throughout the day from Nvidia, Taiwan Semiconductor, Advanced Micro Devices, and other leaders in the chip sector. However, those gains may not last very long.
Timothy St. John
Financial Writer – European & US Desks
