Wall Street powers ahead with earnings in full swing
Wall Street’s main indexes rose on Tuesday as the earnings season moves beyond big banks, with investors keeping a close watch on the impact of higher inflation on demand even as a stronger dollar dents profits.
A soaring U.S. currency led pharma major Johnson & Johnson (JNJ.N) to trim its annual adjusted profit view and IBM Corp to warn of a nearly $3.5 billion hit.
“The stronger dollar becomes the issue and that is going to get a pass this earning season, because we’d be more concerned if there was a degradation of demand which we’re not seeing,” said Art Hogan, chief market strategist at B. Riley.
The U.S. dollar hovered just above a one-week low on Tuesday, marking its third straight day of declines as markets reduced the odds of a full percentage-point Federal Reserve rate hike this month.
Spiraling inflation initially led markets to price in a 100 basis points hike in interest rates in the upcoming Fed meeting later this month, until some policymakers signaled a 75 basis points increase.
“Most people are looking forward to the Fed meeting ... and that could be the last kitchen sink. We can now sort of recover through the rest of the year where people can actually start to play some offense rather than defense,” said Sandy Villere, portfolio manager at Villere & Co.
Boosting the major indexes, Apple Inc (AAPL.O) gained 1.7%, recovering almost all its declines from the previous session, when a report said the company planned on slowing hiring and spending growth next year.
Other high-growth stocks such as Tesla Inc (TSLA.O), Microsoft Corp (MSFT.O), Meta Platforms Inc (META.O) and Amazon.com Inc (AMZN.O) were also trading higher.
In this earnings season, analysts expect aggregate year-on-year S&P 500 profit to grow 5.8%, down from the 6.8% estimate at the start of the quarter, according to Refinitiv data.
At 12:10 p.m. ET the Dow Jones Industrial Average (.DJI) was up 485.95 points, or 1.56%, at 31,558.56, the S&P 500 (.SPX) was up 72.15 points, or 1.88%, at 3,903.00, and the Nasdaq Composite (.IXIC) was up 250.25 points, or 2.20%, at 11,610.30.
All of the 11 major S&P 500 sector indexes gained, with at least seven of them adding more than 2% each.
Boeing Co (BA.N) jumped 4% on plans by private equity firm 777 Partners to buy up to 66 more Boeing 737 MAX jets.
Hasbro Inc (HAS.O) beat market estimates for quarterly profit, sending the toymaker’s shares up 1.7%. read more
Netflix Inc’s (NFLX.O) shares rose 3.6% ahead of its results after market close.
Meanwhile, the yield on 10-year Treasury notes traded in a narrow range of 2.95% and 3.01%, buoying bets for riskier assets.
Advancing issues outnumbered decliners for a 5.73-to-1 ratio on the NYSE and a 4.07-to-1 ratio on the Nasdaq.
The S&P index recorded one new 52-week high and 30 new lows, while the Nasdaq recorded 21 new highs and 31 new lows.