US stocks rose on Tuesday after a fresh batch of corporate earnings largely beat estimates even as investors weighed risks to economic growth from the Federal Reserve raising interest rates to combat inflation. About half the gain was retraced after 4 p.m. in New York when a handful of technology results disappointed investors.
(Bloomberg) — US stocks rose on Tuesday after a fresh batch of corporate earnings largely beat estimates even as investors weighed risks to economic growth from the Federal Reserve raising interest rates to combat inflation. About half the gain was retraced after 4 p.m. in New York when a handful of technology results disappointed investors.
The S&P 500 and the Nasdaq 100 rose for a third straight session. The Coca-Cola Co. and General Motors Co. closed the session in green after topping analysts’ earnings estimates. Google parent Alphabet Inc. fell postmarket after missing estimates. Microsoft Corp. which also reported earnings after markets closed, topped expectations but cited the impact the surging US dollar had on revenue growth.
Treasuries rallied, with the 10-year yield falling to around 4.08%. The dollar dropped after data on Tuesday showed that home-price growth in the US slowed as high borrowing costs sapped demand.
Investors still expect the Fed to raise rates by three-quarters of a percentage point during its meeting next week. But recent economic data is already showing that Fed tightening has started to weigh on the US economy, leading investors to speculate that the central bank may be approaching the end of its aggressive tightening campaign. This renewed expectation of less hawkishness from the Fed, as well as a better-than-expected earnings season so far, have pushed stocks higher in recent days.
“The big thing is what we’re seeing from earnings, and as we get more and more, the market is coming around to this sense that the outlooks aren’t nearly as bad as some had feared,” Shawn Cruz, head trading strategist at TD Ameritrade, said in an interview. “The market was actually bracing itself for more pessimistic tones from companies as we got through earnings and it’s not coming out that way right now. It’s mixed too, but even being mixed is ahead of expectations.”
Roughly 28% of S&P 500 companies have reported earnings, with around 70% outperforming estimates, according to data compiled by Bloomberg.
Analysts are also expecting a jumbo hike of 75 basis points from the ECB on Thursday, even as many economists now reckon a recession has begun in the euro region. German business confidence improved in October, data showed Tuesday, though remained at depressed levels as Europe’s largest economy heads into a challenging winter.
Elsewhere in markets, the British pound gained as Rishi Sunak formally took over as UK prime minister on Tuesday, vowing to “fix” the mistakes made by his predecessor, Liz Truss.
Key events this week:
- Earnings due this week include: Apple, Exxon Mobil, Ford Motor, Credit Suisse, Airbus, Amazon, Bank of China, Boeing, Caterpillar, Cnooc, Intel, McDonald’s, Mercedes-Benz, Merck, Samsung Electronics, Shell, Vale, Visa, Volkswagen
- Bank of Canada rate decision, Wednesday
- ECB rate decision, Thursday
- US GDP, durable goods orders, initial jobless claims, Thursday
- Bank of Japan policy decision, Friday
- US personal income, personal spending, pending home sales, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 rose 1.7% as of 4 p.m. New York time
- The Nasdaq 100 rose 2.1%
- The Dow Jones Industrial Average rose 1.1%
- The MSCI World index rose 0.8%
Currencies
- The Bloomberg Dollar Spot Index fell 0.8%
- The euro rose 0.9% to $0.9967
- The British pound rose 1.7% to $1.1471
- The Japanese yen rose 0.7% to 147.93 per dollar
Cryptocurrencies
- Bitcoin rose 4.6% to $20,274.81
- Ether rose 11% to $1,493.73
Bonds
- The yield on 10-year Treasuries declined 16 basis points to 4.08%
- Germany’s 10-year yield declined 16 basis points to 2.17%
- Britain’s 10-year yield declined 11 basis points to 3.64%
Commodities
- West Texas Intermediate crude rose 0.5% to $85.02 a barrel
- Gold futures rose 0.2% to $1,657.90 an ounce
–With assistance from Emily Graffeo and Peyton Forte.
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