US stocks closed higher on Friday, marking a strong recovery after a week marked by significant volatility. The markets demonstrated resilience following a sharp sell-off earlier in the week, as investor sentiment was boosted by encouraging economic data that eased concerns of an impending recession. This rebound reflects growing optimism about the stability of the US economy, even as the market continues to navigate ongoing challenges. With renewed confidence, investors are looking ahead, hopeful about the economic outlook and the potential for continued growth in the coming weeks.

Key Takeaways:

  1. S&P 500 Rebounds to Close Higher: The S&P 500 advanced 0.47% on Friday, finishing at 5,344.16. This late-week rally helped the index recover much of the ground lost earlier in the week, ending just 0.04% lower for the week after briefly turning positive during the session.
  2. Nasdaq Composite Adds to Gains: The Nasdaq Composite rose 0.51% to close at 16,745.30, continuing its recovery from Monday’s significant losses. Despite the week’s volatility, the Nasdaq ended the week down by just 0.18%, reflecting strong investor interest in the tech sector.
  3. Dow Jones Inches Up: The Dow Jones Industrial Average increased by 51 points, or 0.13%, closing at 39,497.54. Although the Dow remained down by 0.6% for the week, Friday’s gain marked a significant comeback from the 1,000-point drop experienced on Monday.
  4. Volatility Peaks Amid Market Correction: The week marked the most volatile period of 2024, with the S&P 500 falling nearly 10% from its recent all-time high at its lowest point. The Nasdaq Composite entered correction territory, dropping more than 10% from its peak. The Cboe Volatility Index spiked to levels not seen since the onset of the Covid-19 pandemic.
  5. US Treasury Yields Reflect Mixed Sentiment: The 10-year Treasury yield experienced fluctuations throughout the week, dipping below 3.70% before rebounding to 3.94% on Friday. The 2-year Treasury yield showed less movement, finishing slightly higher at 4.051%.
  6. European Markets End Volatile Week Higher: The Eurozone’s Stoxx 50 gained 0.7%, with strong performances from major financial and industrial players leading the way. The pan-European Stoxx 600 also rose 0.6%, reflecting broader market strength across the region. France’s CAC 40 stood out, rising 0.3% to close at 7,270, lifted by gains in key stocks such as Accor, AXA, and Unibail-Rodamco-Westfield, which each saw increases between 1.4% and 1.6%. In the UK, the FTSE 100 ended the week slightly down. Meanwhile, Germany’s market experienced mixed results, with inflation data confirming a slight uptick (2.6% in July), keeping investor focus on economic stability.
  7. Asian Markets Track US Recovery: Asian markets closed the week on a positive note, with Japan’s Nikkei 225 gaining momentum, supported by strong performances in the technology and manufacturing sectors. Australia’s S&P/ASX 200 also saw solid gains, driven by advances in financial and resource stocks. South Korea’s Kospi benefited from a surge in tech and biotech shares, contributing to a strong finish for the week. In contrast, China’s CSI 300 faced headwinds, slipping slightly as investors weighed mixed domestic economic data, including a modest rise in consumer prices and a continued decline in producer prices, which tempered broader market optimism.
  8. Crude Oil Posts Weekly Gain: US crude oil prices surged over 4% for the week, with the West Texas Intermediate contract rising 0.85% on Friday to settle at $76.84 per barrel. Brent crude for October gained 0.63%, closing at $79.66 per barrel, as geopolitical tensions in the Middle East continued to influence market dynamics.

FX Today:

  1. EUR/USD Maintains Stability Despite Market Volatility: EUR/USD traded within a narrow range, showing resilience amid broader market fluctuations. The pair has been range-bound year-to-date between 1.06 and 1.10, reflecting a balanced outlook despite various economic pressures. This stability suggests that EUR/USD may continue to consolidate within this range in the near term, with investors keeping a close eye on upcoming economic data that could influence future movements.
  2. USD/JPY Faces Pressure as Downtrend Resumes: The USD/JPY pair continued its decline on Friday, dropping 0.48% to trade at 146.58, as the yen regained strength against the dollar. After failing to break through the 148.00 resistance level earlier in the week, the pair has resumed its downward trajectory. Key support levels to watch include 145.45 and 144.30. On the upside, any recovery would need to clear the 147.00 mark before testing higher resistance levels.
  3. GBP/USD Struggles Near Key Resistance Levels: The British pound saw modest gains on Friday, inching up 0.11% to trade at 1.2760. However, GBP/USD faced strong resistance at the 1.2785 level, just below the 50-day moving average. A breakout above this threshold could pave the way for further gains towards the 1.2800 figure and beyond, but if the pair fails to break through, it may test lower support levels at 1.2657.
  4. NZD/USD Remains in Tight Range Amid Market Consolidation: The NZD/USD pair continued to trade within a narrow range, holding around 0.6010. The pair has remained in a consolidative phase for seven consecutive days, with immediate resistance at 0.6000 and support at 0.5950. A breakout above 0.6000 could trigger a rally towards 0.6040, while a break below 0.5970 might lead to a deeper pullback towards 0.5900.
  5. USD/CAD Struggles to Break Resistance Amid Mixed Signals: The USD/CAD pair encountered resistance at the 1.3600 level, retreating to test support around 1.3550. The pair remains in a consolidation phase, with mixed signals keeping it in a tight range. The 200-day SMA at 1.3477 provides additional support, but a sustained move above 1.3600 would be needed to shift the momentum upward.
  6. Gold Tests Key Resistance as Uptrend Continues: Gold prices edged higher, with XAU/USD trading at $2,432, up 0.22%. The precious metal is approaching significant resistance at the $2,450 level, as buyers gather momentum indicated by the RSI. A successful break above $2,450 could open the door for further gains, potentially testing at $2,477 and the all-time high at $2,483. On the downside, support is found at $2,370 and $2,349.

Market Movers:

  1. Sweetgreen Soars on Revenue Beat: Shares of Sweetgreen surged more than 33% after the salad chain reported second-quarter revenue of $184.6 million, surpassing the $181 million consensus estimate. The company also provided full-year revenue guidance in the range of $670 million to $680 million, aligning closely with analyst expectations of $674 million.
  2. Doximity Jumps on Strong Earnings: Doximity shares skyrocketed more than 38% after the digital health company posted first-quarter earnings of 28 cents per share, excluding items, well above the 22 cents per share expected by analysts polled by FactSet. This robust performance highlights the company’s strong market position in the digital healthcare space.
  3. E.l.f. Beauty Declines on Slowing Growth Guidance: E.l.f. Beauty’s stock tumbled more than 14% after the cosmetics company issued new guidance pointing to slower growth ahead. The updated outlook raised concerns among investors, leading to a significant sell-off.
  4. Unity Software Surges on Earnings Beat: Unity Software shares climbed over 8% following the company’s better-than-expected second-quarter results. Unity reported a loss of 32 cents per share on revenue of $449 million, beating analyst expectations of a 42-cent loss per share on $440 million in revenue. The results boosted investor confidence in the company’s financial health.
  5. Expedia Rallies on Earnings Beat: Expedia’s stock jumped more than 10% after the travel company delivered better-than-expected earnings and revenue. Expedia reported adjusted earnings of $3.51 per share, beating the $3.06 per share consensus estimate, while revenue came in at $3.56 billion, above the expected $3.53 billion.
  6. Akamai Technologies Rises on Strong Results: Akamai Technologies’ stock climbed nearly 11% after the cloud company reported second-quarter earnings of $1.58 per share on revenue of $980 million, surpassing the expected $1.53 per share and $977 million in revenue. Akamai also raised its full-year outlook, expecting adjusted earnings between $6.34 and $6.47 per share.
  7. Insulet Drops on Slower Patient Growth: Insulet shares fell nearly 9% after the company’s management indicated on an earnings call that new patient growth was slowing, particularly among those switching from competitors. This followed the company’s preannouncement of its quarterly results in July, contributing to the downward pressure on the stock.
  8. Paramount Global Edges Higher on Workforce Cuts: Paramount Global’s shares climbed around 1% after the media conglomerate announced plans to cut 15% of its U.S. workforce, approximately 2,000 jobs, in a bid to streamline operations. While the company’s quarterly earnings exceeded expectations, a miss on revenue kept gains modest.
  9. CyberArk Continues to Climb Post-Earnings: CyberArk shares rose nearly 4%, continuing their upward trajectory following the company’s strong earnings report on Thursday. Bank of America raised its price target on CyberArk, describing the cybersecurity firm as “a diamond in the rough,” which further boosted investor sentiment.

As the week draws to a close, the stock market’s resilience amid significant volatility underscores the complex relationship of economic data, investor sentiment, and global developments. Despite a rocky start with Monday’s sharp sell-off, major indices like the S&P 500 and Nasdaq managed to claw back much of their losses, lifted by encouraging jobless claims data and a recovery in investor confidence. The performance of key sectors, from tech to energy, alongside movements in the FX and commodities markets, reflects a market still sensitive to global economic shifts. As we move forward, the focus remains on how these dynamics will influence market trajectories in the coming weeks, with investors keeping a close watch on economic indicators and corporate earnings.