SpaceX’s recent decision to delay a Space Force mission due to bad weather has unsettled its investors, potentially impacting the market.
Wall Street, on the other hand, reached a 20-month high last Friday. A promising U.S. employment report boosted spirits, leading to a 0.4% rise in the S&P 500 index. This marked its sixth consecutive week of gains, a streak not seen in four years.
Investors are closely watching shares from Alphabet, Amazon.com, Apple, Meta Platforms (formerly Facebook), Microsoft, Nvidia, and Tesla. These stocks, often dubbed “the Magnificent Seven,” are under scrutiny for potentially being overpriced. Their average projected price-to-earnings (p/e) ratio is around 35, more than double the S&P 500’s long-term average p/e of 16.5.
Tim Murray from T.Rowe Price counters this criticism by arguing that these high valuations are justified by robust fundamentals such as return on equity (ROE), a measure of efficient management.
Further updates from Wall Street reveal that both the Dow Jones Industrial Average and Nasdaq mirrored the S&P’s growth with an identical rise of 0.4%. Bond market yields also rose following strong data indicating more jobs and higher wages than anticipated.
This positive data dispelled recession fears and boosted economy-linked stocks. Energy-related stocks led this rally with a solid gain of 1.1%, supported by steady oil prices.
The market’s Relative Strength Index (RSI) was at 54.77 this week, suggesting neutral investor sentiment.
Investors are advised to stay alert and monitor market trends before making any investment decisions. Despite Wall Street’s robust performance and some backing the valuations of “the Magnificent Seven,” these stocks remain under close scrutiny.
As market volatility continues, strategic decision-making can guide investors towards prosperity.