U.S. Stocks Continue Upward Momentum

Last week, the S&P 500 (SPX) rose by 1%, rebounding from a Thursday selloff as investors seized the opportunity to buy. The U.S. economy’s strong performance, as indicated by recent economic data, has increased confidence that the Federal Reserve will achieve a soft landing. While the Fed raised rates and expressed concerns about inflation, there is no expectation of further rate hikes this year.
The Nasdaq Composite Index (IXIC) also saw gains of up to 2%, driven by prominent stocks like Meta Platforms and Google-parent Alphabet. Amazon and Apple’s upcoming earnings reports are eagerly awaited. This quarter’s setup resembles the last one, where a low hurdle rate and improved fundamentals led to significant beats. Q2 EPS projections for the S&P 500 were lowered, but most macro data showed sequential improvements. The Dow Jones Industrial Average (DJI) continued its upward trajectory, marking its third consecutive weekly gain and reaching its highest level since last February.
The highlight of the week will be the jobs report, along with the ADP employment change and JOLTS. The upcoming week promises a flurry of earnings reports, including major companies like Caterpillar, Pfizer, Uber, AMD, Starbucks, PayPal, Qualcomm, Apple, Amazon, and more.
As of August 1, S&P 500 companies who have released actual results have overall beat EPS estimates and majorly surpassed revenue estimates. More companies are giving positive guidance.

What UpTrendPicks.com is saying about U.S. stocks

For this year, we have reversed our view from last year and are now Neutral. Economic data has been favorable, inflation has eased, and the Fed’s actions have not been as severe as anticipated. However, we urge caution as positive surprises can quickly turn negative. Prepare portfolios for higher rates and consider trimming exposure to richly valued U.S. stocks in favor of growth at a reasonable price or value-oriented companies with visible earnings potential. The S&P 500 has a track record of outperforming global markets, making it a compelling investment. While the market appears bullish in the near term, valuation remains a concern given current interest rates.
We are optimistic about the S&P 500’s earnings potential for 2024, looking at a target of 4740. U.S. stocks continue to show upward momentum, but investors should remain cautious and consider portfolio adjustments to manage risk. Economic data, Fed actions, and earnings reports will play crucial roles in shaping market sentiment moving forward. Subscribe to UpTrendPicks.com and be prepared for potential shifts in the market landscape.

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