Amazon Heats Up Wall Street, But Fed Cools Sentiment

The S&P 500, Nasdaq, and Dow Jones Industrial Averages finished the week higher, extending impressive monthly gains. Amazon shares surged 9.6% to all-time highs after the company announced sales exceeding analysts' expectations. This helped the consumer discretionary sector surge its fastest since mid-May, rising 4% in a single day.

At the other extreme, Apple's shares fell 0.4% despite better-than-expected iPhone sales forecasts for the holiday season. However, sentiment was dampened by Tim Cook's comments about possible supply constraints.

Signals from the Fed have cooled market enthusiasm. Raphael Bostic, head of the central bank's Atlanta branch, announced that a December rate cut is not certain, while Beth Hammack, president of the Cleveland branch, admitted that she voted against the cut, citing continued high inflation. As a result, market expectations of a December rate cut have decreased: the probability has fallen to 65%, from 92% a week earlier (CME FedWatch data).

“The situation is similar to the day before: corporate earnings are slightly better than expected, but the Fed is sending more hawkish signals,” commented James Ragan of DA Davidson. Jake Seltz of Allspring added that the market may have been “too far ahead of reality” regarding the pace of monetary easing.

Grocery store stocks also felt the pressure, with some investors fearing a drop in sales in November if the SNAP food assistance program expires as part of the ongoing shutdown.

Even though two federal judges ruled that the Trump administration must maintain funding for the benefits, shares of Kroger, Conagra and Walmart fell 2.8%, 1.3% and 1%, respectively.

US indices ended the day higher, with the Dow Jones up 0.09%, the S&P 500 up 0.26%, and the Nasdaq up 0.61%. This caps another strong month on Wall Street: the S&P 500 rose for the sixth consecutive month, and the Nasdaq for the seventh, marking its longest streak since 2018. The Dow Jones is also enjoying its best winning streak in over six years. For the week, the S&P gained 0.7%, the Nasdaq 2.24%, and the Dow 0.75%.

Earnings season is going strong: of the 315 S&P 500 companies that have released their third-quarter reports, a full 83.2% beat market expectations—well above the historical average of around 67%. With some official macroeconomic data unavailable due to the government shutdown, investors are paying particularly close attention to corporate results.

“The government isn’t providing us with the usual set of information, so we’re listening to what companies are saying,” said Kim Forrest, chief investment officer at Bokeh Capital.

Among the day's biggest gainers was Warner Bros. Discovery. Shares rose 8.7% following Reuters reports that Netflix is ​​considering acquiring some of the studio's assets and its streaming services . Netflix shares rose 2.7% after announcing plans for a 10-for-1 stock split. Western Digital gained 8.7% after a better-than-expected earnings forecast, and First Solar shot up 14.3% after a strong quarterly report.

Wall Street was dominated by gains: in New York, there were 1.28 rising stocks for every falling stock, and on the Nasdaq, 1.42. Trading volume was close to the average for the last 20 sessions.