NEW YORK (AP) — U.S. stocks are at an all-time high Friday as Netflix soars and CVS Health falls amid mixed earnings reports.
The S&P 500 rose 0.2% in morning trading, nearing its all-time high set earlier this week. As of 10:30 a.m. ET, the Dow Jones Industrial Average was down 115 points, or 0.3%, a day after setting a new record, while the Nasdaq Composite Index was up 0.6%.
Netflix soared 10.5% after the streaming giant reported its latest quarterly profit beat analysts’ expectations. This was despite the slowing growth in the number of subscribers.
That helped offset an 8.5% decline in CVS Health, which said it was likely to report earnings for its latest quarter that were significantly lower than analysts expected. The company also announced that Executive Vice President David Joyner will join Karen Lynch as President and CEO.
Trading across Wall Street remained relatively calm as the S&P 500 index heads toward the end of its longest winning streak of the year, its sixth consecutive winning week.
Robust economic data has raised hopes that the U.S. economy can fully emerge from the worst inflation in generations, easing into a painful recession that many investors saw as all but inevitable. You can finish without falling. And now, with the Federal Reserve cutting interest rates to keep the economy strong, optimists are hopeful that stocks could rise even further.
But critics warn that the stock is too expensive, given that the company’s shares are rising faster than company profits.
David Lefkowitz, head of U.S. equities at UBS Global Wealth Management, sees both sides. But he said that while the stock price is high relative to earnings, it’s “reasonable” considering the Fed’s interest rate cuts and other factors. He also expects corporate profits to continue to grow, raising his forecast that the S&P 500 index could rise to 6,300 from 6,200 in June.
On Wall Street, American Express fell 4.8% even though its latest quarter’s profit beat analysts’ expectations. The company said sales were lower than expected and full-year sales for 2024 were likely to remain at the lower end of the range it had projected at the beginning of the year.
The decline in credit card companies was the biggest reason why the Dow lagged behind other stock indexes.
SLB, a major company that helps companies extract oil and natural gas, fell 2.6% after reporting mixed results. Profits were slightly above analysts’ expectations, but revenue was lower as falling oil prices made some overseas producers cautious about spending. CEO Olivier Le Pouch said sales increased in the Middle East and Asia and offshore North America, but decreased in Latin America.
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Oil prices fell this week as fears that Israel would attack Iranian oil facilities as part of retaliation for an Iranian missile attack earlier this month abated. Iran is a major producer of crude oil, and a strike could disrupt exports to countries such as China. Concerns about the strength of demand from China are also impacting oil prices.
A barrel of international standard Brent crude oil fell a further 2.2% on Friday and was expected to fall 8% this week. It has fallen below $74 after rising above $80 early last week.
The winner on Wall Street was Intuitive Surgical, which rose 8.5% after reporting better-than-expected profits for its latest quarter. The company, which enables minimally invasive surgery with robotic-assisted systems, also delivered better-than-expected revenue.
In the bond market, US Treasury yields fell. The yield on the 10-year U.S. Treasury note fell to 4.07% from 4.10% late Thursday.
Traders agree that the Federal Reserve will cut its key interest rate by 0.5% at its next meeting in November. Expectations had long been high that the Fed would cut interest rates by another 0.5 percentage point, a larger than usual rate cut, but the strong update on the economy dispelled those hopes. The federal funds rate currently ranges from 4.75% to 5%.
In overseas stock markets, Chinese stock indexes soared in recent days. Shares rose 2.9% in Shanghai and 3.6% in Hong Kong after reports that growth in the world’s second-largest economy slowed over the summer.
A slump in the real estate market has exacerbated the economic slowdown, raising hopes for a massive stimulus package from China’s government and central bank, although questions remain over how effective it will be.
Stock indexes were mixed elsewhere in Asia and Europe.
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AP Business writers Matt Ott and Elaine Kurtenbach contributed.
