Wall Street Gains Momentum: S&P 500 Index Logs Fourth Consecutive Gain

Wall Street has been on a winning streak lately, with the S&P 500 Index posting its fourth consecutive gain. The benchmark index reclaimed the 5,200 level in the latest trading session, driven by solid corporate earnings and renewed bets for Fed rate cuts. This has reignited investors’ interest in the stock market, leading to a resurgence in tech stocks with the resumption of the AI craze.

The SPDR S&P 500 ETF Trust (SPY), which tracks the S&P 500 Index, has surged 3% in the past week. Among the many stocks that have powered the ETF higher, five stand out as the top performers. These include Bio-Techne Corporation (TECH), Howmet Aerospace (HWM), Garmin Ltd. (GRMN), Aptiv PLC (APTV), and Amcor (AMCR).

The first-quarter earnings season has shown steady improvement and resilience, with earnings growth accelerating and estimates for future periods starting to increase. Of the 310 S&P 500 members that have reported first-quarter results, total earnings have risen 5% from the same period last year, with 78.1% beating EPS estimates and 59.4% beating revenue estimates.

A softer-than-expected jobs report has revived bets for an earlier rate cut from the Federal Reserve. U.S. service sector activity unexpectedly contracted in April, leading the futures market to price in at least two interest rate cuts by the end of the year. However, the Fed has signaled that its fight against inflation will continue for a longer period, hinting at extended higher rates.

In addition to weak economic data, consumer confidence has dropped to the lowest level since mid-2022, and the U.S. economy had a slow start to the year, expanding at the slowest pace in two years due to lower consumer and government spending amid growing inflation.

The SPDR S&P 500 ETF Trust holds 502 stocks in its basket, with a nice balance across each security to prevent heavy concentration. The fund is widely spread across sectors, with information technology, financials, healthcare, and consumer discretionary accounting for a double-digit allocation each. With an AUM of $505.5 billion and an expense ratio of 0.09%, the ETF has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.

Among the top-performing stocks in the SPY ETF, Bio-Techne, Howmet Aerospace, Garmin, Aptiv, and Amcor have shown significant gains in the past week. These companies operate in various sectors, including life sciences, aerospace, navigation technology, automotive technology, and packaging solutions.

Overall, the recent momentum on Wall Street can be attributed to strong corporate earnings, renewed bets for Fed rate cuts, and the resurgence of tech stocks. Investors are closely watching economic indicators and Fed policy decisions to gauge the future direction of the market. As the market continues to evolve, staying informed and analyzing key trends will be crucial for investors looking to navigate the ever-changing landscape of the financial markets.