U.S. markets and stock exchange traded funds were clawing back late on Friday after reeling in early morning trading on a pessimistic holiday outlook from e-commerce giant Amazon and iPhone maker Apple.
The Invesco S&P 500 Equal Weight ETF (RSP), which follows the S&P 500 Equal Weight Index (EWI), dipped 0.1% on Friday. Meanwhile, the S&P 500 was flat, the Dow Jones Industrial Average was 0.2% higher, and the Nasdaq Composite increased 0.1%.
U.S. equities initially weakened on Friday after Apple warned that the impact of supply chain disruptions will be even worse this the holiday sales quarter, and Amazon.com Inc also projected downbeat holiday quarter sales amid labor shortages, Reuters reports.
“I think investors are taking [Apple and Amazon’s earnings results] in stride because they’ve seen broader strength across the market” during earnings season, Keith Lerner, co-chief investment officer at Truist Advisory Services, told the Wall Street Journal. “You’re seeing this quarter that corporate America is showing how adaptable it is.”
With 279 S&P 500 companies already reporting results by Friday morning, 82.1% have beat earnings expectations, according to Refinitiv data. S&P 500 companies are expected to generate a 39.2% year-over-year earnings growth rate for the third quarter.
“The market hasn’t overly rewarded companies that have beat expectations that have come in screamingly positive, but it has punished misses,” Liz Young, head of investment strategy at SoFi, told Reuters. “That tells me we are sort of shifting into this period where we have fundamentals starting to run the show again and that is a healthy place to be.”
Throughout this earnings season, companies across many sectors have warned about ongoing supply chain troubles and labor problems. However, many have raised prices on goods, betting that customers could help keep paying for the higher costs.
Supply chain problems are “not a terrible thing for corporate profits,” Jonathan Golub, chief U.S. equity strategist and head of quantitative research at Credit Suisse, told the WSJ.
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