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The Dow Jones broke a 13-day winning streak, its best since 1987, on Thursday.
The Fed decided to relaunch its rate hike campaign at the latest FOMC meeting, pushing the federal funds rate to 5.25%-5.5% on Wednesday. Fed Chair Jerome Powell didn’t discard the possibility of a new hike at the upcoming September FOMC meeting.
A new report by the Bureau of Economic Analysis put economic growth at 2.4% annually in the second quarter of 2023, beating expectations of 1.8%. Consumer confidence rose to a two-year high, driven by a strong job market and a steady decrease in inflation. The personal consumption expenditure price index also fell to a two-year low in June.
Microsoft shares fell 2.1% weekly as investors showed disappointment with slowed growth from Azure, the company’s cloud arm. A lack of gains from Microsoft’s booming artificial intelligence front also disappointed investors, although analysts were quick to say that rewards from those developments will come later in the year.
Google’s parent company Alphabet posted year-over-year revenue growth of 7% for the second quarter, beating analyst estimates and taking the company’s shares up by 10% on a weekly basis at deadline Friday. This caused several analysts to raise their forecasts on the company.
It’s a similar story for Meta, formerly known as Facebook. The company posted 11% year-over-year revenue growth for the second quarter and beat estimates for earnings per share.
Intel CEO Pat Gelsinger said on the second-quarter earnings call the chipmaker is “well-positioned to capitalize on the significant growth” of AI, although revenue for the second quarter was down 15% year-over-year.
A new proposal aimed at making financial institutions more resilient to hard times would raise capital requirements for big banks by an average of 16%.
Shares of Banc of California soared as the company announced a merger with PacWest Bancorp through an all-stock deal that will create an entity with $36 billion in assets.
What to watch
Data from construction spending for June will be released Tuesday, along with the ISM manufacturing index. On Friday, another economic data point arrives in the form of the July jobs report.
Earnings season continues next week with reports from Merck, Toyota, Pfizer, Advanced Micro Devices, HSBC, Caterpillar and Starbucks on Tuesday. Wednesday is earnings day for Qualcomm, CVS, Shopify and PayPal. On Thursday, Apple, Amazon, Ali Baba, ConocoPhillips, Amgen and AB Inbev will post results.
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