Stock Market Rally Gains Momentum Amid Tame Inflation and Strong Earnings

Strategic Insights -

The stock market rally has gained significant momentum in recent days, with the S&P 500 and Nasdaq hitting fresh 52-week highs amidst tame inflation data and strong earnings reports from major companies. Salesforce.com buoyed software names with its first price hikes in seven years, while Delta Air Lines reported strong earnings and guidance, sending airline stocks and travel plays soaring. JPMorgan Chase and Wells Fargo also rallied on the back of their earnings reports, as did the energy sector, with ExxonMobil announcing a $4.9 billion deal to acquire Denbury.

Key Takeaways:

  • The S&P 500 and Nasdaq hit fresh 52-week highs, with the Dow lagging but flirting with 2023 highs.
  • Tame inflation reports eased Fed rate hike fears, sending Treasury yields and the dollar tumbling.
  • Salesforce.com fueled software gains with its first price hikes in seven years, with CRM stock soaring and clearing a buy point.
  • Delta Air Lines reported strong earnings and guidance, with revenue increasing 19% to $14.6 billion and international travel revenue soaring 61%.
  • JPMorgan Chase and Wells Fargo handily beat Q2 views, with JPMorgan enjoying a 72% EPS gain and revenue growth of 34%.
  • UnitedHealth topped Q2 views despite rising medical costs, with EPS growing 10% and revenue rising 16% to $92.9 billion.
  • Amazon's Prime Day sales event was its biggest ever, with Prime members purchasing more than 375 million items worldwide.
  • Energy stocks rallied, with ExxonMobil announcing a $4.9 billion deal to acquire Denbury and Berkshire Hathaway agreeing to buy Dominion Energy's 50% stake in the Cove Point LNG export plant.

Statistics:

  • The S&P 500 has risen 12% over the past six weeks amid the rally.
  • Treasury yields have fallen 18 basis points since May 31, with the 10-year yield dropping to 3.33%.
  • The dollar has lost 2.5% against major currencies since May 31.
  • Salesforce.com's first price hike in seven years is expected to boost revenue growth by 9%.
  • Delta Air Lines' Q2 revenue increased 19% to $14.6 billion, with international travel revenue soaring 61%.
  • JPMorgan Chase's Q2 revenue leapt 34% to $42.4 billion, with EPS growth of 72%.
  • UnitedHealth's Q2 EPS grew 10% to $3.34, with revenue rising 16% to $92.9 billion.

Sources:

  • "Inflation Cools, Fed Fears Ease" - CNBC
  • "Salesforce Spikes On Price Hike" - CNBC
  • "Delta Air Lines Earnings Fly 86%" - CNBC
  • "JPMorgan Chase, Wells Fargo Rally on Earnings" - CNBC
  • "UnitedHealth Earnings Rise" - CNBC
  • "Amazon Prime Day Biggest Yet" - CNBC
  • "Microsoft, Nvidia and Others to Lose Weight in Nasdaq 100 Rebalance" - CNBC
  • "ExxonMobil to Acquire Denbury in $4.9 Billion Deal" - CNBC