Wall Street rallied on Friday, as Treasury yields stabilized and investors were digesting recent data and hawkish Fed comments. The S&P 500 rose 1.5%, touching its 7-week high and the Nasdaq jumped 2% while the Dow Jones popped 391 points. The University of Michigan consumer sentiment fell to six months low and significantly below forecasts. Yesterday, Fed Chair Powell set a more hawkish tone saying the Fed is prepared to raise interest rates further if necessary. Megacap stocks rose, including Microsoft, up 2.5%, hitting an all-time high and Apple, Alphabet, Amazon and Nvidia added between 1.8% and 2.9%. Conversely, Diageo lost 11.7% after warning that profit and sales in the first half of its fiscal year would be weaker than expected. Plug Power tumbled 40.5% after the hydrogen fuel cell specialist, third-quarter results missed analysts’ expectations. On the week, the S&P 500 rose 1.1%, the Nasdaq gained 2% while the Dow Jones added 0.6%.
European equity markets declined on Friday, with the German DAX down 0.8% and the Stoxx 600 down 1%, following warnings from Federal Reserve Chair Jerome Powell and ECB President Lagarde about the potential need for further interest rate increases to control inflation. In economic news, initial figures indicated that the U.K. economy remained stagnant in the third quarter. Corporate earnings reports continued to influence individual share prices, with Germany's Allianz falling slightly after a 30% drop in third-quarter net profit. The company maintained its 2023 operating profit target. Also, shares of British drinks giant Diageo dropped more than 12% after the company warned of weaker operating profit growth in the first half of its financial year. For the week, the DAX managed to rise slightly while the broader Stoxx 600 retreated.
The FTSE 100 index closed 1.3% lower at 7,359 on Friday, tracking the pessimism across European equity markets amid tighter financial conditions in the United States, while fresh GDP data showed an increasing impact of restrictive rates from the BoE. In the meantime, new data showed that the UK’s economy stalled in the third quarter, better than expectations of a slight contraction but failing to expand for the first time in one year. The results were unable to support Gilt yields in the session, pressuring the financial sector to book sharp losses. Prudential lost 2.2%, while Barclays and Standard Chartered dropped over 1% each. Also, Diageo plunged 12% after forecasting lower profit in the upcoming quarters.
The CAC 40 index closed 1% lower at 7,045 on Friday. On the domestic corporate front, Wordline was the biggest laggard, falling 6.6%. Also, Pernod Richard lost 5.4%, as peer alcoholic beverage company Diageo declined 12.2%, after stating that revenues and profit H1FY2024 would be lower than expected. Moreover, heavyweight luxury stocks LVMH and Kering dropped 3.8% and 3.3%, respectively, after Richemont's weaker-than-expected earnings. On the week, the CAC remained unchanged.
The FTSE MIB lost around 0.5% to trade at the 28,500 threshold on Friday On the corporate front, Cnh Industrial, Campari, and Prysmian are among the worst-performing stocks thus far, all losing above 3%. Pirelli declined 2% as the company postponed the release of its updated industrial plan although it reported positive quarterly earnings. Also, Nexi is down by 0.6% as traders took profit from last session's surge. Conversely, Leonardo is doing well, gaining more than 2%, after the company confirmed its financial estimates for 2023. As the week concludes, the Italian index is set to close with an overall loss of approximately 0.6%.
The IBEX 35 dropped to 9,371 on Friday. Traders also digested fresh corporate results. The index was dragged by Grifols (-4.83%) and Inmobiliaria (-3.19%) after the real estate company reported 300 million euros of losses in the first nine months of 2023 compared to 398 million euros of profits in the same period of 2022. Merlin Properties (-1.53%) and Cellnex Tel (-0.81%) also fell, with the latter failing to convince investors of reduced losses. In the green values, Indra increased by 2.11% and Repsol added 0.85%. Weekly, the index closed 0.8% higher.
