Market Update
In the past two weeks, many American companies have announced operating figures for the last quarter. Stocks have done well so far this week, as most operating numbers have beaten market expectations because many companies lowered their outlooks. We still recommend cautious optimism. Firstly, many companies will soon be releasing their earnings report. Secondly, companies’ recent announcements might increase market concern. Microsoft announced a layoff from multiple divisions. Apple will reduce the production of the iPhone 14+. Also, several other company reports could point to more challenges ahead for some industries.
- Profits at several big financial institutions fell, hurt by a slowdown in investment banking and corporate mergers.
- SNAP posted its lowest-ever revenue growth as business owners spent less on advertising.
- Home appliance maker Whirlpool lowered its 2022 outlook due to the cooling housing market, cutting profit to $5 per share from the expected $9.5 to $11.5.
There was some upbeat news this week, with Federal Reserve official James Bullard saying rapid rate hikes may stop in the first half of next year. Separately on Friday, the Wall Street Journal reported that some Fed officials were discussing the possibility of scaling back the 0.75 percent rate hike in December or even stopping early next year. Again, we would advise cautious optimism as we are not sure this is the consensus view of most of the Fed. We have had this kind of news many times this year. If Fed policy is really to be used as an investment basis, it is advisable to wait at least until the Fed is sure of a change.
China’s announcement that it was suspending updates to its economic data, including its third-quarter growth rate could signal that the numbers have fallen short of expectations. However, the markets reacted calmly, with some analysts saying they had accepted that China was no longer the main engine of global growth.
