Wall Street’s bull run took another hit this week, due to a mixed bag of quarterly results from Alphabet, Microsoft, Meta Platforms, Apple, and Amazon. Investors were unhappy with Microsoft’s soft Azure cloud revenue growth guidance and Meta’s heavy artificial intelligence focused capital expenditure plans. Meanwhile, Apple missed quarterly revenue consensus estimates in a key market – China and in its services segment. But, Alphabet delivered good numbers and Amazon issued strong revenue guidance for the holiday season. For the week, the S&P slipped 1.4%, while the Nasdaq slid 1.5%. The Dow fell 0.2%.
On the economic front, overall inflation in the US is now 2.1%, the lowest since early 2021 and just above the central bank’s 2% goal. But, job growth slowed sharply last month as workers were sidelined by hurricanes and the Boeing strike. Despite that, unemployment stayed steady at historically low 4.1%.
The all important election awaits us next week.
Future Wealth’s View
In our report last week, we had stated that “If any one of the obscure details – be it economic data or the elections or any of the Mag 7 company’s results, goes awry, we will have a sell off of epic proportions.” As if on cue, the mixed results from Mag 7 companies caused a major sell off this week and the lower job growth numbers added to the nervousness among investors. Now, we have to wait for the potential upheaval from the election next week.
We will echo our comments from last week – patience is of utmost importance. Whether we agree or disagree with the candidate who becomes the next President, it is critical for investors to remember that he or she will be inheriting a sturdy economy. The US has grown by 2.7% in the past year, outperforming every other developed economy and much of the growth has come from people and businesses being more productive. That growth in productivity will likely not be reversed irrespective of Presidential policies over the next four years.
In the end, Wall Street is driven by US corporate earnings. Let us not forget that amidst the chaos that could ensue in the coming week.