Wall Street gains on Amazon boost but rate caution tempers enthusiasm

The S&P 500, the Nasdaq Composite and the Dow boasted weekly gains and their longest monthly winning streaks in years. (EPA Images pic)

NEW YORK: Wall Street’s main stock indexes closed higher today, with their biggest boost coming from Amazon’s upbeat earnings forecast, but sentiment was dampened by worries that the Federal Reserve (Fed) is becoming more cautious about cutting rates.

The S&P 500, the Nasdaq Composite and the Dow boasted weekly gains and their longest monthly winning streaks in years.

Amazon shares rallied sharply, closing up 9.6% after hitting an all-time high following its forecast for quarterly sales above estimates.

The online retailer and cloud services giant helped the consumer discretionary sector close up 4% for its biggest one-day gain since May 12.

However, elsewhere in megacap companies, Apple’s shares closed down 0.4% after its forecast for iPhone holiday quarter sales surpassed Wall Street expectations was clouded by CEO Tim Cook’s flagging of supply constraints.

In remarks that cooled investor hopes for policy easing, Federal Reserve Bank of Atlanta president Raphael Bostic said yesterday that a December rate cut was not locked in despite market expectations for a cut.

Federal Reserve Bank of Cleveland president Beth Hammack said she had opposed Wednesday’s rate cut because inflation is too high.

Yesterday, traders were pricing in a 65% probability of a December rate cut, down from 72.8% on Thursday and 91.7% a week ago, according to CME Group’s FedWatch tool.

“The theme today is pretty similar to what we saw yesterday.

“It’s earnings coming in a little better than expected but tempered by a little more hawkish commentary from the Fed,” said James Ragan, co-CIO and director of investment management research at D.A. Davidson.

Jake Seltz, portfolio manager for the Empiric LT Equity team at Allspring, said investors “may have gotten in front of their skis” in their bets for lower rates.

Some grocery stocks traded lower on Friday on worries about a dip in November sales if federal food aid benefits, known as the Supplemental Nutrition Assistance Program (SNAP), lapse in the ongoing government shutdown.

Two federal judges ruled yesterday that President Donald Trump’s administration cannot suspend food aid for millions of Americans during the shutdown, saying the government must use contingency funds to pay for the benefits.

However, shares of grocer Kroger ended down 2.8% while food supplier Conagra Brands lost 1.3% and Walmart ended down 1% even after the rulings.

The Dow Jones Industrial Average rose 40.75 points, or 0.09%, to 47,562.87, the S&P 500 gained 17.86 points, or 0.26%, to 6,840.20 and the Nasdaq Composite gained 143.81 points, or 0.61%, to 23,724.96.

For the month, the S&P 500 added 2.27%, for a sixth consecutive monthly gain, which was its longest such streak since August 2021.

The Nasdaq Composite added 4.7% for October, capping a 7-month winning streak, its longest since early 2018.

The Dow rose 2.5% for the month, for its sixth straight monthly gain and its longest monthly advance since January 2018.

For the week, the S&P 500 rose 0.7% while the Nasdaq added 2.24% and the Dow climbed 0.75%.

Of the 315 S&P 500 companies that have reported third-quarter results so far, 83.2% have surpassed analysts’ estimates, according to LSEG data.

That is well above the historical average, where roughly 67% of firms beat forecasts.

With a lack of economic data from the government due to the month-long shutdown, Kim Forrest, CIO at Bokeh Capital, said investors were keenly focused on earnings reports.

“The government isn’t giving us the data that we have become dependent on, so we’re using companies as we should by the way for guidance about how the economy is going,” she said.

In other moves, Warner Bros Discovery jumped 8.7% following a Reuters report that Netflix was actively exploring a bid for the company’s studio and streaming business.

Netflix rose 2.7% after it unveiled plans for a 10-for-1 stock split.

Western Digital closed up 8.7% after rallying to an all-time high following its forecast of quarterly earnings above Wall Street estimates.

Shares of Solar panel maker First Solar surged 14.3% after surpassing expectations for third-quarter sales.

Advancing issues outnumbered decliners by a 1.28-to-1 ratio on the NYSE, where there were 159 new highs and 131 new lows.

On the Nasdaq, 2,773 stocks rose and 1,958 fell as advancing issues outnumbered decliners by a 1.42-to-1 ratio.

The S&P 500 posted 17 new 52-week highs and 34 new lows while the Nasdaq Composite recorded 71 new highs and 159 new lows.

On US exchanges, 21.03 billion shares changed hands compared with the 21.13 billion average for the last 20 sessions.