The Nasdaq Composite hit a fresh record high on 29 October 2024, buoyed by optimism around major tech earnings and an easing of tensions in the Middle East.
The tech-centric Nasdaq gained 0.7%, crossing the 18,700 mark, with the S&P 500 up 0.2%. Meanwhile, the Dow Jones Industrial Average lagged, dipping by 75 points or 0.2%.
Key corporate earnings announcements, especially from high-profile tech companies, are anticipated to shape market sentiment this week. Investors are closely watching for reports from Alphabet, Snap, Reddit, Chipotle, and AMD, set to release after the closing bell. Major names such as Meta Platforms and Microsoft are scheduled to report on Wednesday, followed by Apple on Thursday. Ahead of these releases, shares of Meta and Alphabet saw gains of over 1%.
Sam Stovall, Chief Investment Strategist at CFRA Research, told CNBC that the tech-heavy Nasdaq’s recent highs come amid high valuations in the tech sector, making future earnings growth critical to justifying elevated price-to-earnings (P/E) ratios. Stovall noted that the market is “expensive” and that sustained growth will be necessary to support current valuations, especially within tech stocks. This week marks the busiest phase of the quarterly earnings season, with over 150 S&P 500 companies expected to report results by Friday.
Investor sentiment has also been shaped by the recent decline in oil prices, driven by eased tensions in the Middle East. As of 6:22 p.m. UTC on Tuesday, a barrel of Brent crude was trading at around $71.29, a 6.2% drop from its $76 price on Friday evening.
This recent fall in oil prices signals improved stability in the Middle East, with Iranian and Israeli tensions showing signs of restraint. Sky News reported yesterday that, despite ongoing missile exchanges between Iran and Israel, recent statements by Ayatollah Ali Khamenei avoided escalating threats, while Israeli strikes on Iranian-linked targets avoided energy facilities, providing reassurance to oil markets.
The lowered oil prices, now at a level not seen for most of the past two years, are expected to gradually translate to lower costs at the pump, offering potential relief for consumers. The lower energy prices have provided a boost to broader market optimism, as high fuel costs have been a persistent inflationary pressure. This has particularly benefited the Nasdaq, with investors encouraged by the prospect of lower operational costs for many tech firms, which are sensitive to both inflation and broader economic pressures.
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