Investing.com - Top 5 things that rocked U.S. markets this week:
1. Banks Lead in Earnings; Netflix Plunges
Earnings season was in full flight for the week and the majority hit or beat Wall Street expectations.
The financial sector continued to perform well. Morgan Stanley (NYSE:MS) led the broker-dealer reports and Goldman Sachs (NYSE:GS) also topped estimates, although concerns about its succession plan hit the stock later in the day.
And it was a tale of two techs as a momentum stock fell short of what investors wanted and an old stalwart came through.
Netflix (NASDAQ:NFLX) stock tumbled at the start of the week after the company missed expectations on new subscribers, a key metric for the streaming company. Netflix added 5.14 million subscribers in the latest quarter, shy of analysts’ expectations for more than 6.2 million.
But after the bell Thursday, Microsoft (NASDAQ:MSFT) reported second-quarter earnings that beat consensus thanks to cloud services revenue.
2. Fed’s Powell Sees Steady Rate Increases; Trump Not Thrilled
The prospect for the path of U.S. interest rates took an interesting turn at the end of the week. At first things seemed to jibe with market expectations that the Federal Reserve will raise rates once and possibly twice before the year is out.
At his Humphey-Hawkins testimony before the Senate Banking Committee and the House Financial Services Committee, Federal Reserve Chairman Jerome Powell reiterated the central bank should gradually increase interest rates.
But President Donald Trump shook some of the market’s confidence, saying on Thursday he’s “not thrilled” about the Fed hiking rates and going into more specifics on Twitter Friday.
The tweets had little overall impact on the market forecasts for upcoming rate hikes. But they did take the legs from the dollar on Friday. The U.S. Treasury Department has long had a policy of simply stating that a strong dollar is in America’s best interest.
3. Buffett Buyback Bonanza in the Offing?
Big names can still move the market. Warren Buffett showed that when Berkshire Hathaway (NYSE:BRKa) led the financial stocks higher on Wednesday after saying that the Oracle of Omaha (and Vice Chairman Charlie Munger) would have fewer restrictions on stock buybacks.
Buffett and Munger will now be able to buy back shares when they feel those shares are below “intrinsic value.”
Under its previous buyback policy the company only repurchased shares when they were below 1.2x book value.
That led to some speculation that a big buyback could be coming after Berkshire reports earnings Aug. 3. The company hasn’t bought back stock since 2012.
4. Trump Threatens More Tariffs
Trade-war concerns took at back seat through most of the week, but were revived Friday and could weigh more heavily next week, despite another full earnings calendar.
President Trump said in an interview on CNBC that he is ready to impose tariffs on $500 billion worth of Chinese goods to the U.S. if China does not back down on its trade policies.
“I’m not doing this for politics, I’m doing this to do the right thing for our country” he said on CNBC’s "Squawk Box." “We have been ripped off by China for a long time.”
5. Oil Down for the Week, Again
Crude oil prices posted a second-straight weekly decline and may continue to weigh on energy stocks, as they have of late.
On the New York Mercantile Exchange crude futures for September delivery rose $1.30 to settle at $70.46 a barrel Friday.
Investors continue to weigh up the prospect of a global shortage in supplies, despite Saudi Arabia's pledge to hold off flooding the market with more output.
Crude oil prices were supported Friday by the plunge in the dollar following Trump’s remark about the greenback and other currencies.