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With better-than-expected earnings reports from over 70 of the S&P 500 companies, the stock market continued to rally with the index registering a six-day winning streak. Analysts are hopeful of a further rally by the year-end.
The investor sentiment on Wall Street remains highly optimistic with better-than-expected earnings reports. The Dow Jones Industrial Average (INDEXDJX: .DJI) touched a record-high on Wednesday, October 19, gaining another 0.4% of 152 points.
The Dow Jones index ended trading at 35,609 levels on Wednesday, On the other hand, the S&P 500 (INDEXSP: .INX) gained 0.37% notching a 6-day winning streak on Wall Street. However, the tech-heavy Nasdaq Composite retreated 0.05% ending the day at 15,121 levels.
The market has been able to keep its momentum going despite several roadblocks in the way. Investors have been keeping the worries aside with rising delta-variant cases, China property crisis, supply chain hiccups, rising inflation, and much more.
Sam Stovall, chief investment strategist at CFRA notes that the market has been continuing its rally amid better-than-expected bank earnings. Speaking to CNBC, Stovall said:
“That kicked off this rally. I think it’s a combination of earnings. It is month-over-month changes in inflation that looks like it is peaking out and the effect of the Covid variant is slowing down.”
He further added that the S&P 500 could also hit record-high levels which could push the bull rally further. He noted: “History shows that stock market advances following the recovery from pullbacks recorded an average price gain of 8.4% over the following 98 calendar days before slipping into a new decline of 5% or more. Favorable seasonal factors should also help power the market to additional new highs”.
More Steam Left in the Stock Market amid the Season of Earnings Reports
Fundstrat’s Tom Lee also believes that the market could rally more than 6% from here by the end of the year. Citing economic resilience and fall in the COVID cases, Lee added:
“We believe a strong risk-on environment is underway. We do not think consensus is that bullish. We already know that investors got very pessimistic in September… However, the improvement in market technicals, such as clearing the 50-day moving average, is actually suggesting that underlying trends are getting stronger.”
Lee believes that the S&P 500 can add another 100 points moving to 4,800 levels. Let’s take a look at some of the top-performing stocks on Wednesday.
Verizon Communications Inc (NYSE: VZ) reported strong earnings for Q3 2021 thereby becoming the top-performer on Dow gaining 2.4%. The telecom giant also raised its forecast amid the growing adoption of 5G services.
Streaming giant Netflix Inc (NASDAQ: NFLX) also reported better earnings for the third quarter on Tuesday. In the last quarter, the streaming giant added 4.4 million subscribers. This was more than what Wall Street analysts expected at 3.84 million.
United Airlines (NASDAQ: UAL) also managed to beat analysts’ expectations for the top-line and bottom-line. The rebound in the travel demand has got United shares soaring by 0.5% on Wednesday. Ford (NYSE: F) gained 4% after Credit Suisse (SWX: CSGN) upgraded the auto company on its EV shift. The rating agency predicted a 30% rally in the stock. Stong rumors floated that PayPal Holdings Inc (NYSE: PYPL) is planning to acquire social media giant Pinterest Inc (NYSE: PINS).