A rally in some of the world’s largest technology companies pushed US stocks decidedly higher, with the earnings season rolling in. The pound held gains after Liz Truss resigned as UK prime minister.
(Bloomberg) — A rally in some of the world’s largest technology companies pushed US stocks decidedly higher, with the earnings season rolling in. The pound held gains after Liz Truss resigned as UK prime minister.
Apple Inc., Microsoft Corp. and Amazon.com Inc. contributed the most to the advance in the S&P 500, overshadowing a rout in Tesla Inc. that followed disappointing sales. International Business Machines Corp. surged on a bullish revenue forecast. AT&T Inc. beat estimates for wireless subscriber growth, suggesting mobile-service providers remain insulated from tighter consumer budgets.
“Company earnings seem to be going fairly well,” said Chris Gaffney, president of world markets at TIAA Bank. “And we’re seeing some warnings of what comes in the future, but right now the earnings are holding up. As long as companies can make money, maybe the higher interest rates don’t impact the markets as much as they could.”
To be sure, several market observers remarked that the bar has been lowered quite a bit ahead of the current earnings season, boosting the odds of upside surprises. It’s also worth pointing out that there’s been no shortage of warning signals about the economy when it comes to corporate outlooks.
Alcoa Corp. — which is a dependable barometer of US economic health across industries including construction, automotive, aerospace and consumer packaging — said demand for the world’s heavy industries is falling. Union Pacific Corp. — the largest US freight railroad — cut its forecast for volume growth to reflect a “challenging year.”
As traders wade through corporate results, “with an extra eye on guidance, expect volatility to remain elevated,” said Mike Loewengart at Morgan Stanley Global Investment Office.
Investors also kept an eye on economic data, with existing-home sales posting their longest stretch of monthly declines since 2007 and jobless claims dropping to a three-week low.
A month of economic chaos will be a warning to any future British leaders about the risk of being reckless with the country’s finances, said UK traders after Truss stepped down. In interviews Thursday, many investors predicted the next prime minister will restore calm and make policy decisions that bring stability back to markets. Some traders said markets will be volatile until a replacement is named, and any new leader will struggle to fix the UK’s weak economy and double-digit inflation.
The pound strengthened to above $1.13, and the yield on UK 10-year gilts was near levels before the mini-budget was announced last month. The FTSE 250 Index rallied as much as 1.2%.
Key events this week:
- Euro area consumer confidence, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 rose 0.7% as of 11:21 a.m. New York time
- The Nasdaq 100 rose 1.2%
- The Dow Jones Industrial Average rose 0.9%
- The Stoxx Europe 600 rose 0.3%
- The MSCI World index rose 0.6%
Currencies
- The Bloomberg Dollar Spot Index fell 0.4%
- The euro rose 0.5% to $0.9826
- The British pound rose 0.7% to $1.1297
- The Japanese yen rose 0.1% to 149.74 per dollar
Cryptocurrencies
- Bitcoin rose 0.5% to $19,288.44
- Ether rose 0.8% to $1,304.4
Bonds
- The yield on 10-year Treasuries advanced two basis points to 4.15%
- Germany’s 10-year yield advanced two basis points to 2.40%
- Britain’s 10-year yield declined one basis point to 3.87%
Commodities
- West Texas Intermediate crude rose 2% to $87.25 a barrel
- Gold futures rose 0.8% to $1,647.30 an ounce
–With assistance from Vildana Hajric and Peyton Forte.
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