Stocks rallied this week in many sectors to produce the best month since 2020, even as economists worry that the U.S. is moving toward a recession. File Photo by John Angelillo/UPI | License Photo
July 29 (UPI) -- U.S. stocks rallied this week to end trading Friday with the best month since 2020 after tech giants reported better than expected financial results and speculation over the Federal Reserve's aggressive economic tightening.
The Nasdaq Composite index showed a monthly gain of 12.3% by the end of trading Friday, according to data from Nasdaq.
Those gains are the most the index has made since April 2020 when the Federal Reserve took efforts to stabilize the economy after the emergence of the COVID-19 pandemic.
Meanwhile, the S&P 500 index rose 9.1% in July for its biggest monthly gain since November 2020 when the first announcements about effective coronavirus vaccines were made sending stocks soaring 11% that month, the Nasdaq data shows.
The Dow Jones Industrial Average rose about 6.7% in July, the market data shows.
The news came after stocks tanked in the first half of the year as the rise of inflation, the war in Ukraine and other factors affected investor sentiment.
However, companies including Apple, Microsoft, Amazon and Google parent company Alphabet this week reported earnings results that came as a welcomed sign to investors.
Apple said in a news release announcing its earning results that the company posted a June quarter revenue record of $83.0 billion, up 2% year-over-year.
"Our June quarter results continued to demonstrate our ability to manage our business effectively despite the challenging operating environment," said Luca Maestri, Apple's CFO.
"During the quarter, we generated nearly $23 billion in operating cash flow, returned over $28 billion to our shareholders, and continued to invest in our long-term growth plans."
Andy Jassy, Amazon CEO, said in a statement on Thursday announcing the company's earnings results that the shopping giant is "making progress" on its controllable costs "despite continued inflationary pressures in fuel, energy and transportation costs."
Amazon's stock prices rose by more than 10% on Friday after Jassy's statement and is up by more than 28% in July.
Howard Silverblatt, a senior index analyst at S&P Dow Jones Indices, told The New York Times on Friday that 209 of the 278 companies in the S&P 500 to report earnings so far have beaten analyst expectations.
The Federal Reserve on Wednesday ordered another 0.75% interest rate hike amid increasing pressure to control high-running inflation that's making essential items more expensive for Americans.
"I do not think the U.S. is currently in a recession," Fed Chair Jerome Powell told reporters Wednesday. "The reason is there are too many areas of the economy that are performing too well."
This Federal Reserve increase is the second in two months. The Fed ordered the same increase at its meeting in June, which was the largest hike since 1994. The central bank went for a half-point increase in May.
The Bureau of Economic Analysis said in a report Thursday that the U.S. economy shrank again in the second quarter, falling by 0.9% on an annualized basis from April through June. That follows a decrease in the GDP of about 1.6% in the first quarter.
Those results indicate that the Federal Reserve's efforts to slow the economy may be working, adding to the rise in investor sentiment.