Market report: Dow-Jones saves itself narrowly into the plus

After calm trading, the share indices ended trading unevenly with minor fluctuations. As tech stocks remain battered, investors are discovering new industries.

At the end of a gratifying week on the stock market for the leading index Dow Jones Industrial, it ran out of air at the end of the week. Nevertheless, the index marked the tenth consecutive day of gains – even if the daily gain of 2.51 points or 0.01 percent to 35,227 points could hardly have been tighter.

That means the biggest winning streak in six years has continued, even if investors took profits, especially in late trading before the weekend. The daily high in the Dow was 35,340 points. Price gains from heavyweights in the blue chip sector such as Unitedhealth, Merck, Goldman Sachs, Chevron and Procter & Gamble provided support. The heavyweights Microsoft and Apple, which are also included in the Dow, gave way.

For the Dow, this results in a weekly plus of almost 2.1 percent. The day before, the index had reached its highest level since April last year. Most recently, the index also managed to jump over the 35,000 point mark. The market-wide S&P 500 index also ended trading almost unchanged at 4536 points with a mini plus.

Above all, the newly discovered joy of investors in pharmaceutical and financial stocks determined trading today. Paul Nolte, market strategist at financial services firm Murphy & Sylvest, pointed out that valuations in the healthcare and banking sectors are lower than those of technology stocks, which have been the focus of recent months.

Prices were also supported by hopes that the US Federal Reserve could take a break from raising interest rates. For next week’s rate meeting, analysts are expecting an average rate hike of 25 basis points. The majority of the experts at Helaba expect that the Fed will then end its interest rate cycle.

Meanwhile, after the heavy losses of the previous day, the Nasdaq went down slightly, which must be seen as a great disappointment. Because there was no question of a strong countermovement after the technology index recorded its biggest daily loss since March yesterday. The composite index closed 0.2 percent lower, while the Nasdaq 100 index ended 0.26 percent lower at 15,425 counts.

Investors were increasingly concerned that valuations were justified. “The market was very overbought,” said Patrick Spencer, equity researcher at financial services firm Baird. “If you didn’t play in this market, you missed it.”

As of Monday, the dominance of the few giants among the companies listed in the Nasdaq 100 Index is to be reduced. In addition to Tesla, Apple, Microsoft, Alphabet, Amazon, Nvidia and Meta are among the “magnificent seven”, which now account for more than half of the index weight. On Friday there could therefore be final adjustments in the portfolios of index funds or ETFs that track the index.

Standing out among today’s scarce corporate data was American Express, one of the country’s leading US credit card companies and financial services companies, which was not well received. Because the company “only” left its annual forecast unchanged despite strong quarterly figures, thereby disappointing its investors. Earnings rose 12 percent to $15 billion, but that was less than analysts had expected.

As card payments hit a record high in the second quarter, the company braces for potential defaults by tripling its reserves to $1.2 billion. This is necessary because, unlike the competition, Amex not only processes payments, but also grants loans itself. The credit card giant did not want to increase its profit forecast of $11.00 to $11.40 per share for the full year – which brought the share from the Dow Jones a minus of 3.9 percent.

After a whole series of new quarterly results, mainly from the USA, caused a stir on the stock market, investors were reluctant to make larger decisions today. The DAX ended trading at 16,177 points, a slight daily loss of 0.17 percent.

The leading domestic index moved in a narrow range between 16,103 and 16,181 points and closed close to its daily high. On a weekly basis, this results in a slight increase of 0.4 percent. The MDAX, the index for medium-sized stocks, closed almost unchanged at 28,253 points with growth of 0.1 percent.

Although the agenda of new reports was manageable today, the market continued to deal with the sobering business results of the two US heavyweights Tesla and Netflix. But the meager quarterly figures of the German software giant SAP were also a topic of the day.

In the DAX, SAP was the biggest loser with a minus of around 4.2 percent. Europe’s largest software manufacturer has cut its forecast for its declared future business. The DAX heavyweight corrected its annual targets yesterday after XETRA closed because cloud revenues were weaker than expected.

Thomas Altmann from QC Partners stated that the figures and the outlook for SAP’s important cloud business fell short of expectations. Even a surprisingly strong increase in profits in the past quarter was not able to appease investors.

Although the number of companies will remain strong in the coming week, the interest rate decisions of the central banks will also come back into focus. So there can be no talk of summer calm.

In the next week, the US Federal Reserve and the European Central Bank will decide on their future interest rates. Investors are currently puzzling over how many interest rate hikes on both sides of the Atlantic could follow this year. Especially with regard to the Fed, the majority expects that the monetary watchdogs will end the interest rate cycle after a further increase of a quarter of a percentage point, write the experts at Helaba.

Speculations on large-scale support measures for the Chinese economy are meanwhile driving the oil price higher at the end of the week. The price of North Sea oil Brent rose by 1.1 percent per barrel in the late afternoon, while the price of US light oil WTI rose by the same amount.

The euro was barely moving in late US FX trading on Friday. The common currency last cost 1.1128 US dollars in US trading and thus only slightly more than in the late European currency trade. The European Central Bank had set the reference rate at 1.1123 (Thursday: 1.1197) US dollars

Yesterday, dollar strength had put pressure on the euro, and the rate had slipped by as much as a cent. Among other things, robust data from the US labor market had increased speculation that the US Federal Reserve (Fed) would continue to raise interest rates in the fight against high inflation. The prospect of interest rate hikes usually supports a currency’s price.

Sartorius shares rose sharply during the analysts’ conference in the afternoon. She shook off her losses and gained around 7.7 percent at the top of the DAX. Stockbrokers referred to the analyst conference call. There the management said that the weakness in the incoming orders of the pharmaceutical and laboratory supplier had found a bottom, which is now probably having a confidence-building effect.

The stock had previously slipped after negatively received quarterly figures. Because in the first half of the year, after the Corona boom, customers were less willing to spend and instead reduced their inventories. The sales of the pharmaceutical and laboratory equipment supplier fell by around 16 percent, the operating result (EBITDA) fell by as much as 26 percent. The market feared weak numbers, but not so weak, complained one trader.

After devastating tornado damage in an important pharmaceutical plant in the USA, the US pharmaceutical company Pfizer expects the plant to be out of action for weeks. The plant is one of the world’s largest manufacturing facilities for injectable drugs. The products manufactured there include anesthetics, painkillers and anti-infectives. According to Pfizer, nearly 25 percent of the sterile injectable drugs used in US hospitals come from this facility.

After Pfizer reported the tornado damage for the first time on Thursday, shares in German competitor Fresenius had risen significantly. Stockbrokers expected that the Fresenius subsidiary Kabi could benefit from bottlenecks.

The chemical group BASF and the Chinese energy company Mingyang are founding a joint venture for an offshore wind farm in southern China. Mingyang will hold 90 percent and BASF ten percent of the shares, the two companies announced. Most of the electricity generated will be used for the new BASF Verbund site in Zhanjiang, which will be supplied entirely with electricity from renewable sources.

BMW has officially started production of its new 5 Series in Dingolfing, including the new i5 electric model. This is the third all-electric BMW that production has started at the plant in Lower Bavaria in the past two years, the Munich-based automaker announced today. The largest European BMW plant is in Dingolfing, and according to the company, the proportion of purely electric vehicles in production is expected to increase to over 40 percent in the coming year.

BMW launched an electric car early in 2013 with the i3. Since the i3 was expensive for a small car and sold poorly in the first few years, no new electric model came onto the market for years afterwards. In the meantime, given the competition from Tesla and China, there are fears that the German car industry as a whole may have missed the train of the times. BMW, like other German manufacturers, has started catching up.

According to the company, the VW subsidiary Audi is negotiating with the Chinese joint venture partner SAIC about a joint development of electric cars. SAIC chief engineer Zu Sijie told reporters his company has reached an agreement with Audi to jointly accelerate the development of electric cars. He did not give details. Audi said it is working with partners on the future direction of business in China.

After the US financial investor Silver Lake secured a good 84 percent of the shares in Software AG, there were unscheduled changes in the MDAX and SDAX. As the index provider Stoxx announced on the German Stock Exchange in the evening, the Darmstadt-based company will be deleted from the MDAX and replaced by the Regensburg-based automotive supplier Vitesco. The Bundesliga club Borussia Dortmund takes its place in the SDAX. The changes will therefore take effect on Tuesday.