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US stock market report – more record highs, Morgan Stanley delivers earnings

Both the S&P 500 and Dow Jones finished the week at record highs, jumping 0.4% and 0.5% respectively on Friday, taking the weeks gains to 1.4% and 1.2%.

This was the fourth straight week of gains for both markets, which have been supported by a flurry of highly positive economic data and what is looking like another solid round of quarterly earnings reports, flying in the face of the bears.

It seems the market is catching up with the Federal Reserve as the bond rate has fallen back towards 1.5%, supporting higher valuations. Traditional value sectors including energy and financials are seeing the lion’s share of capital flows.

Following on from the 18.3% Chinese economic growth which boosting weakening emerging market returns, capacity utilisation in the US, a measure of the amount of ‘slack’ in the economy, printed at 74.4 points – well below the 80 points that is seen as being inflationary.

How did popular US stocks fare on Friday?

Morgan Stanley (NYSE: MS) was the latest investment bank to deliver record profits, reporting a 60% increase in revenue for the quarter and a 100% increase in profit to US$3.98 billion. Net interest income on its loan book added 49% as bad debts continue to normalise.

Buybacks are back in favour, with Morgan Stanley reporting it had repurchased US$2 billion in stock after restrictions were released.

Whilst these results are a positive for the financial sector, they are very much market-facing investment banks so have limited relevance for Australia’s Big Four.

Back home on the ASX, the S&P/ASX 200 (ASX: XJO) and All Ordinaries (ASX: XAO) are both expected to open higher on Monday. See Rask Media’s daily ASX 200 morning report.

The Golden Rules of Investing

We might be experts in retirement, but with combined financial advice experience of 35+ years, we’ve nearly seen it all. 

In mid-2023, our senior team at Wattle Partners Financial Planning put the finishing touches on a brand-new report “The Golden Rules of Investing“.

In this free report, we outline the key principles that determine all of the portfolio construction and investment decisions of Wattle Partners. Collated over decades, this paper should be seen as a work-in-progress, constantly under review in light of the ever-evolving nature of markets. 

You’ll find the free report on my Author page. Simply click the button below to view the Golden Rules.

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Disclosure: At the time of publishing, Drew owns shares in Disney.

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Wattle Partners is a financial advice firm, servicing clients around Australia, specialising in retirement planning (pre and post retirement). 

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