The U.S. stock market continued its remarkable upward trend, closing its sixth consecutive winning week with new records on Friday. The U.S. stock market saw gains across major indices, driven largely by Netflix’s strong performance and solid economic data. As optimism rises, Wall Street faces a mixture of enthusiasm and caution, with some critics pointing to high stock valuations. Here’s a look at the key highlights from the latest trading session.

Netflix (NASDAQ:NFLX) Boosts U.S. Stock Market Gains

One of the significant movers in the U.S. stock market this week was Netflix, whose shares surged 11.1%. The streaming giant’s quarterly earnings exceeded expectations, even as subscriber growth slowed. Despite this slowdown, its ability to drive strong profits caught investors’ attention, helping to lift the S&P 500 to a new record.

This gain offset losses in other areas, such as CVS Health (NYSE:CVS), which reported weaker-than-expected earnings for the quarter. Shares of CVS fell 5.2%, marking one of the day’s largest declines. The healthcare giant also announced a leadership change, with David Joyner taking over as president and CEO from Karen Lynch.

Dow Jones and Nasdaq Climb Despite Mixed Earnings Reports

The Dow Jones Industrial Average and Nasdaq composite also closed higher, with the Dow Jones rising 36 points, or 0.1%, and the Nasdaq gaining 0.6%. However, not all companies contributed to the market’s positive momentum. American Express (NYSE:AXP) fell 3.1%, despite posting a profit that exceeded analysts’ expectations. Its revenue, however, missed forecasts, leading the company to project that its full-year revenue will fall at the lower end of its previously forecasted range.

Another drag on the U.S. stock market was SLB (NYSE:SLB), which fell 4.7%. The oil and natural gas services giant reported mixed earnings results, with profit slightly ahead of forecasts but revenue falling short. Lower crude prices, driven by decreased demand from international producers, particularly in Latin America, contributed to SLB’s revenue shortfall.

S&P 500 Marks Six Straight Winning Weeks

Despite mixed performances from some companies, the S&P 500 closed the week up 0.4%, setting another all-time high. This marks the sixth consecutive week of gains, a testament to investor optimism surrounding the economic outlook.

The steady flow of positive economic data has fueled hopes that the U.S. may avoid a recession, despite previous fears of a downturn due to persistent inflation. Investors have also been encouraged by the Federal Reserve’s recent moves to cut interest rates, which many believe will keep the economy humming. Some critics, however, warn that the rapid rise in stock prices may not be sustainable, especially if corporate profits don’t grow fast enough to support current valuations.

Outlook for the U.S. Stock Market

Looking ahead, analysts like David Lefkowitz, head of U.S. equities at UBS Global Wealth Management, believe the U.S. stock market could see further gains. Lefkowitz recently raised his forecast for the S&P 500, expecting the index to hit 6,300 by June 2024, up from his previous estimate of 6,200. His optimism is bolstered by the Federal Reserve’s interest rate cuts and expectations of continued corporate profit growth.

However, not all is rosy on Wall Street. Concerns about oil prices and global demand persist, with Brent crude falling 7.5% this week alone, closing at $73.06 per barrel. Geopolitical tensions and concerns about China’s economic slowdown also cast a shadow over global markets.

Conclusion

The U.S. stock market continues to hit new milestones, driven by solid earnings from companies like Netflix (NASDAQ:NFLX) and optimism surrounding the economic outlook. However, as stock prices climb higher, investors must balance enthusiasm with caution, especially as mixed earnings reports from companies like CVS Health (NYSE:CVS) and SLB (NYSE:SLB) reveal ongoing challenges in specific sectors.

Featured Image: Freepik @ wirestock

Please See Disclaimer