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Wall St faces corporate earnings wave amid stock rally
Stocks rally faces earnings wave as investors wary of AI trade, Fed rate cuts, and weak labour market amid US shutdown
Stocks rally faces earnings wave as investors wary of AI trade, Fed rate cuts, and weak labour market amid US shutdown
– U.S. stocks rally continues, raising concerns over AI trade and potential Fed interest rate changes.
– S&P 500 profits expected to rise 13.8%, but high market valuations create caution among investors.
However, mixed results from major companies have cast doubt on future interest rate cuts after the Fed eased rates by a quarter point on Wednesday. Fed Chair Jerome Powell signalled that a cut at December’s meeting is uncertain, contrary to investor expectations.
Third-quarter earnings have exceeded expectations, with S&P 500 profits projected to rise by 13.8% year-over-year. Over 130 companies are set to report results in the coming week.
Market Valuation
The S&P 500’s forward price-to-earnings ratio has exceeded 23, raising concerns about high market valuations reminiscent of the dot-com era. Analysts suggest earnings must support future stock returns given current valuation levels.
Historically, November is a strong month for stocks, averaging a gain of 1.87%. Future performance trends may indicate continued upward movement, as past instances show stocks often rise after substantial year-to-date gains.
With 44% of S&P 500 companies reporting, 83% have surpassed earnings expectations, signalling strong corporate performance despite challenges. Companies such as Meta Platforms and Microsoft saw share declines post-earnings due to increased spending on AI, while Alphabet’s stock rose amid positive sentiment regarding its cash flow management.
Investors maintain caution due to rising workforce reductions, particularly after Amazon announced a significant global workforce decrease. The ongoing U.S. government shutdown, now the second longest in history, adds uncertainty as critical economic data releases are delayed.
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Big Tech earnings spark investor unease over AI spending
Investors monitor Big Tech’s AI investments, with Meta thriving while Microsoft and Tesla face uncertainty over growth and returns.
Investors monitor Big Tech’s AI investments, with Meta thriving while Microsoft and Tesla face uncertainty over growth and returns.
Investors are reacting sharply to Big Tech earnings this week, sending a clear signal that massive spending must translate into real growth. Markets are becoming less forgiving as companies pour billions into artificial intelligence, data centres and future tech while returns remain uncertain.
Meta has delivered a standout performance, posting a 24 percent jump in revenue for the December quarter, fuelled by AI-powered advertising. The company is doubling down on its strategy, with aggressive investment in AI and infrastructure expected to drive a further 33 percent growth this quarter.
Microsoft and Tesla tell a more cautious story. Microsoft reported only modest growth in its Azure cloud business, raising questions about its exposure to OpenAI, while Tesla plans to double spending on AI and autonomous driving. Analysts warn of a widening gap between bold AI ambitions and what investors expect in returns.
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Federal Reserve holds interest rates amid economic uncertainty
Federal Reserve holds interest rates steady, balancing inflation and jobs, as some governors advocate for a cut. #FederalReserve #InterestRates #Economy
Federal Reserve holds interest rates steady, balancing inflation and jobs, as some governors advocate for a cut.
The Federal Reserve has opted to keep interest rates unchanged, marking the first pause since July. Officials are showing little urgency to resume cuts, even after previous rate reductions.
Two Fed governors opposed the decision, calling for a quarter-point cut, highlighting ongoing debates within the rate-setting committee, which includes both appointed governors and regional bank presidents.
Concerns over the job market and persistent inflation continue to weigh heavily on the Fed’s policy decisions, leaving economists and investors closely watching the next moves.
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#FederalReserve #InterestRates #Economy
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Trump warns Iran as U.S. naval forces approach amid rising tensions
Trump urges Iran to resume nuclear talks or face stronger U.S. military response amid economic struggles and tensions rise.
Trump urges Iran to resume nuclear talks or face stronger U.S. military response amid economic struggles and rising tensions.
U.S. President Donald Trump has urged Iran to return to nuclear negotiations, warning that failure to do so could result in a far more severe military response. Posting on Truth Social, Trump signalled a hardening stance as tensions between Washington and Tehran continue to rise.
Trump confirmed that a U.S. naval strike group led by the USS Abraham Lincoln is moving towards Iran, as protests grow inside the country over alleged government repression.
The show of force comes amid heightened regional instability and mounting pressure on the Iranian leadership.
#Trump #Iran #USForeignPolicy
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