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(Bloomberg) — The S&P 500 Index extended record-breaking gains Friday as tech mega-caps delivered a stream of solid earnings. Reports that Iran had responded to US amendments on an agreement to end the war also buoyed sentiment, sending oil prices lower.
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The S&P 500 Index rose 0.5% at 12:23 p.m. in New York, with six of 11 sectors in the green, led by tech and consumer staples. The Nasdaq 100 Index advanced 1%. Both indexes had closed at new highs on Thursday, with the S&P 500 breaching 7,200, helped by Alphabet Inc.’s post-earnings jump. Most global markets were closed for the Labor Day holiday Friday. West Texas Intermediate crude oil fell nearly 4% to around $101 a barrel. The Vix Index was around 16.80, at the lowest since early February.
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“It is the first day of the month, the weekly option expiry and investors are digesting some huge earnings, so I expect we will see some fireworks before market close,” Vikram Rai, portfolio manager and macro trader at First New York, said.
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Apple Inc. advanced 4.5% after the iPhone maker gave a better-than-expected revenue outlook after Thursday’s market close. Memory stock Sandisk Corp. rose 0.5% while Western Digital Corp. slid as estimate-topping earnings failed to clear high bars.
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“With mega-cap tech earnings coming in solid, adding more fuel to the AI theme, we believe that investors are likely to continue to chase the perceived tech winners in semis and memory, among others,” Wolfe Chief Investment Strategist Chris Senyek wrote in a Friday note.
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Oracle Corp. climbed 7.0% as it’s officially agreed to join the list of AI companies working with the Pentagon’s classified networks.
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Roblox Corp. tumbled around 15% after reporting fewer-than-anticipated users as it implemented safety features restricting how kids, who make up a majority of its audience, can use the platform. Cboe Global Markets Inc. rose 8.9% after cutting expenses guidance and saying it expects to reduce its workforce by about 20%.
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In the energy sector, Exxon Mobil Corp. and Chevron Corp. fell, erasing earlier gains spurred by expectation-topping results. For Exxon, oil-production increases in Guyana and the Permian Basin helped offset supply losses due to the Middle East war.
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Both had earlier warned about diminished production due to the war, spurring some analysts to slash estimates. “Part of the challenge with giving guidance is, as you would imagine, we really don’t know how long the Strait of Hormuz will remain closed,” Exxon Chief Financial Officer Neil Hansen said in an interview.
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President Donald Trump on Thursday said he was sticking with a naval blockade of Iranian ports, underscoring the fragility of the ceasefire. On Friday, the president also said in a post that tarrifs on European Union cars and trucks would rise to 25%.
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On the economic front, the Institute for Supply Management’s measure of overall factory activity held steady at 52.7, matching the highest level since 2022. The ISM’s prices-paid gauge rose for a fourth straight month to a four-year high.
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Next week, attention will shift to earnings reports from Advanced Micro Devices Inc. and Palantir Technologies Inc. Walt Disney Co. and Block Inc. will face questions about near-term restructuring costs in the wake of highly-publicized layoffs. About 82% of companies in the S&P 500 have beaten earnings estimates in the reporting season so far, up from the 77% for the whole season a year ago.
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“Valuations again reflect aggressive multi-year EPS growth expectations, which puts the burden of proof on fundamentals to deliver,” Scott Chronert, head of US equity strategy research at Citigroup Inc., wrote in a note. “We estimate S&P 500 levels are pricing in compounding EPS growth of +11.7% for the next five years, which compares to bottom-up consensus of +12.6%.”
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https://financialpost.com/pmn/business-pmn/us-stocks-extend-record-gains-oil-falls-on-iran-talks-report
