S&P 500 marks key milestone, rises above the 5,000 mark for the first time

S&P 500 rises above the 5,000 mark for the first time

The S&P 500 index closed above 5,000 for the first time on Friday, with investors showing continued optimism about cooling inflation, strong earnings and a resilient economy.

The rally reflects unexpected strength in the economy that has investors believing that as long as the expansion continues, they can ride riskier assets to gains even if interest rates remain high. Stocks in the index have climbed 5.9% since the start of the year and 23% over the past 12 months

Investors have been anxious about recession but a blockbuster jobs report last week showed persistent strength in the labor market. Plus corporate earnings have continued to grow even after inflation has cooled and weakened the pricing power of many companies.

Berkshire Hathaway could be the next thrillion dollar company

Warren Buffett’s Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) is now valued at more than $860 billion, a record high. The Oracle of Omaha’s conglomerate only needs to climb about 16% from current levels to top $1 trillion.

The company’s stock is up about 10% this year and nearly 30% over the past 12 months. If the momentum continues, Berkshire would potentially become the first U.S. company to join the trillion-dollar club alongside global giants like PetroChina and Saudi Aramco.

Shares of Berkshire Hathaway ended the week 0.23% higher

Majority of companies have surpassed earnings expectations

Strong earnings results have been fueling the S&P 500′s steady gains. Nearly three-quarters of stocks reporting so far have surpassed earnings expectations. As at the end of this week, 73% of the 795 stocks that have reported quarterly results so far have posted an earnings per share beat.

However, though companies are posting solid results this earnings season, their revenues are slightly lagging. The top-line revenue beat rate for these companies is at 64%.

Estée Lauder trims work force by 5%

Estée Lauder (EL:NYSE) is laying off up to 3,100 workers as it struggles with lower demand for its high-end brands in China. The company is trying to boost profit following several weak quarters.

The Cosmetics giant which has roughly 62,000 employees, said that it expects to take restructuring and other charges of between $500 million and $700 million, and that it would retrain and redeploy some staff

Estée Lauder shares soared 12% Monday, but ended the week 6.4% lower.

Arm issues strong profit forecast for the current quarter

Shares of Arm Holdings (ARM:NASDAQ) soared 48% on Thursday after the chip design company reported better-than-expected earnings and issued a strong profit forecast for the current quarter.

Arm’s chip design technology is in most smartphones and many PCs. The company reported adjusted earnings per share of 29 cents. Revenue rose 14% to $824 million, beating the $761 million average estimate.

The stock surge added about $38 billion to Arm’s market cap, with more than $34 billion of that accruing to SoftBank, which owns 90% of the company.

ARM shares finished the week 55% higher

Disney makes big bets on football, Taylor Swift and Fortnite

Walt Disney is making big bets on a couple of new initiatives which CEO Bob Iger claims will fuel “significant growth”. The Mouse House is scrambling to recover from years of lackluster results having lower-than-anticipated quarterly revenue of $23.5 billion in its latest eranings report.

Iger announced a joint venture with Fox and Warner Bros Discovery to launch a streaming sports service. The Disney CEO also unveiled a $1.5 billion investment in “Fortnite”-maker Epic Games and an exclusive cut of Taylor Swift’s Eras Tour concert movie that is coming to Disney+.

The new initiatives come as Iger contends with activist investor battles, struggles in its movie studios and Disney’s costly pivot to streaming.

Disney shares jumped 11.5% for the week.