Wall Street approached a record high on October 6, 2023, with the S&P 500 rising by 0.2 percent, closing just 0.3 percent below its all-time high set in October 2023. The index briefly surpassed this mark during trading before pulling back. The Dow Jones Industrial Average gained 104 points, or 0.2 percent, while the Nasdaq Composite increased by 0.3 percent.
In contrast, the Australian market is expected to decline, with futures indicating a drop of 13 points, or 0.2 percent, at the market’s opening. The Australian dollar was trading at US$0.6635 at 05:18 AEDT.
Wall Street’s modest gains capped a relatively calm week following a period of significant volatility. The performance was bolstered by strong corporate earnings, particularly from Ulta Beauty, which saw its shares surge by 12.7 percent after reporting better-than-expected profit and revenue for the latest quarter. CEO Kecia Steelman noted that while customers are facing pressure, the company experienced growth across various categories, especially in e-commerce. This prompted Ulta to raise its revenue forecast for the entire year.
Another positive indicator for the upcoming holiday shopping season came from Victoria’s Secret & Co. The company reported a lesser loss than analysts had anticipated and raised its full-year sales forecast, leading to an 18 percent rise in its stock price.
In the media sector, Warner Bros. Discovery shares increased by 6.3 percent following Netflix‘s announcement of plans to acquire Warner Bros. for US$72 billion in cash and stock. This acquisition, which would bring the company behind HBO Max and iconic franchises like “Harry Potter” under Netflix’s umbrella, is still pending and may face scrutiny from U.S. regulators concerned about market consolidation. Following the announcement, Netflix’s shares fell by 2.9 percent, while shares of Paramount Skydance, another potential bidder for Warner Bros., dropped by 9.8 percent.
Amid these developments, SoFi Technologies experienced a decline of 6.1 percent after revealing plans to introduce US$1.5 billion worth of its stock into the market at a price of US$27.50 per share.
The S&P 500 concluded the day up 13.28 points, reaching 6,870.40. Meanwhile, the Dow Jones Industrial Average rose by 104.05 points to 47,954.99, and the Nasdaq Composite gained 72.99 points, finishing at 23,578.13. Should the S&P 500 return to its record high, it would signal a recovery from previous concerns surrounding the Federal Reserve’s interest rate policies, the influx of capital into artificial intelligence technologies, and the impact of cryptocurrency volatility on broader markets.
Traders now widely expect the Federal Reserve to announce a cut to its main interest rate in the coming week, which would mark the third reduction of the year. Lower interest rates typically boost investment prices and stimulate the economy, although they can also exacerbate inflation, which remains stubbornly above the Fed’s target of 2 percent. Economic reports released on Friday revealed that a preferred measure of inflation for the Fed remained at 2.8 percent in September, aligning with expectations. Additionally, consumer forecasts for inflation in the upcoming year dropped to 4.1 percent, down from 4.5 percent the previous month, according to the University of Michigan. This marks the lowest inflation forecast since January 2023, highlighting a potential easing of inflationary pressures.
In the bond market, Treasury yields rose, with the yield on the 10-year Treasury climbing to 4.13 percent from 4.11 percent late Thursday.
Internationally, stock indexes displayed mixed results. Germany’s DAX increased by 0.6 percent, while South Korea’s Kospi surged by 1.8 percent. Conversely, Japan’s Nikkei 225 fell by 1.1 percent after reports indicated a 3.0 percent decline in household spending in October compared to the previous year, marking the steepest drop since January 2023. The Japanese market has faced instability recently as the Bank of Japan hinted at possible interest rate hikes.
As market dynamics evolve, traders and investors will be closely monitoring developments for further insights into economic performance and potential opportunities.
