The start of the week was exciting. The attempted assassination of Trump has boosted investor enthusiasm, with indices rising and cryptocurrencies booming. The S&P 500 and Nasdaq were joined by the Dow Jones in setting a new record of over 40,000. Good quarterly results from Goldman Sachs, BlackRock, and Morgan Stanley showed that life on Wall Street is getting busier and more profitable, adding to the market’s optimism. This is a quick review from Ivan Kompan, Edinburgh Business School analyst.
Powell confirmed that the latest inflation data shows progress, supported by Fed Governor Adriana Kugler. They stated that the fight against inflation is working. However, IMF chief Kristalina Georgieva warned that global inflation would decline more slowly due to high service prices, which could keep rates high for longer. Jamie Dimon, CEO of JP Morgan Chase, agreed with her, doubting that inflation will be defeated quickly. Nevertheless, markets remain optimistic, expecting two Fed rate cuts by the end of the year and estimating the probability of a third at 52%.
Everything was going well, but in the middle of the week, Trump made a statement that cooled the markets. He compared the United States to an insurance company providing services to Taiwan and emphasized that services must be paid for. This worried microprocessor manufacturers. Add to this the administration’s plans to limit the supply of products with American technology to China, and the outlook for the tech sector immediately dimmed.
Investors were hoping for support from Netflix, which released its quarterly results on Thursday. Although the results exceeded forecasts, the company was disappointed with its outlook for the upcoming quarter. After the announcement, the stock dropped significantly, but by Friday morning, the disappointment had faded. Nevertheless, Netflix’s results, in particular the growth in subscribers and profitability, did not inspire the entire market to rise.
Another trouble was the failure of Microsoft software, which almost caused a global panic. On the night of Thursday to Friday, many companies faced “blue screens of death” on their computers. Initially, the cause was unclear, but CrowdStrike later admitted its fault, saying that the problem was a “defect in the content update for Windows hosts.” Although the problem was small, it impacted banks, airlines, stock exchanges, and Microsoft users, reminding us how dependent we all are on the same code.
As long as humanity retains at least some independence from machines, we are interested in what to expect from the market in the future. Could this week’s drop be an opportunity to buy cheaper and make money? Perhaps, but it’s worth remembering that “if investors bought the Magnificent Seven shares unconditionally, they will be just as determined to sell them.” This means that an attempt to buy a Big Tech dip is worth considering, but it will be a brave decision.
*And finally, we would like to remind you that the information you have just listened to is not an investment advisory. Remember – investments in the stock market are always tied up with financial risks. So be careful and cautious.
