Wall Street ahead on earnings optimism and dovish remarks on rate hike

  • US 30-Year Bond Yield Reaches 3%, TIPS Turns Positive
  • IMF lowers global growth forecast for 2022
  • J&J hits record high after earnings
  • Indices up: Dow 1.45%, S&P 1.61%, Nasdaq 2.15%

April 19 (Reuters) – Wall Street’s three main benchmarks saw their best days in more than a month on Tuesday, with the Nasdaq closing up 2.2% as investors reacted to positive earnings and dovish comments of two US Federal Reserve officials on interest rate hikes. .

Johnson & Johnson (JNJ.N) advanced 3.1% to close a second record in three sessions as the drugmaker’s quarterly profit beat market expectations and increased its dividend. Read more

Of the first 49 companies in the S&P 500 index to report quarterly earnings, 79.6% beat earnings estimates, according to Refinitiv data. Overall, 66% exceeded estimates.

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“It certainly feels like each earnings season, especially since March 2020, is more important than the next, but especially given our position in the economic cycle, the Fed’s rate hike cycle and the backdrop high inflation,” said Max Grinacoff, head of equities. derivatives strategist at BNP Paribas.

International Business Machines Corp (IBM.N) gained 2.4%, before rising 1.8% following its latest post-market data report.

Meanwhile, Netflix Inc (NFLX.O) closed 3.2% higher, before falling 24% after the bell when it announced subscriber numbers fell for the first time in a decade. . The streaming company is also forecasting further losses in the second quarter. Read more

St. Louis Federal Reserve Chairman James Bullard on Monday reiterated his plea for a rate hike to 3.5% by the end of the year to curb inflation at its 40-year high. years. He also said he was not ruling out a 75 basis point rate hike. Read more

Stocks appeared to brush off the remarks, and major indices rallied further in the late afternoon after Chicago Federal Reserve Chairman Charles Evans and Atlanta Federal Reserve Chairman Raphael Bostic , made more accommodating comments. Read more

However, bond yields continued their recent upward moves. The 30-year yield topped 3% for the first time since April 2019, while the yield on 10-year Treasury inflation-protected securities (TIPS) turned positive for the first time since March 2020, the start of the coronavirus pandemic. Read more

A Wall Street sign is pictured outside the New York Stock Exchange in New York, October 28, 2013. REUTERS/Carlo Allegri/File Photo

“We generally assume that higher yields should be good for banks, but that correlation has broken down a bit and it’s the sectors most negatively correlated to rising rates – the defensive sectors – that have actually recovered. “said BNP’s Grinacoff.

The Dow Jones Industrial Average (.DJI) rose 499.51 points, or 1.45%, to 34,911.2, the S&P 500 (.SPX) gained 70.52 points, or 1.61%, to 4,462.21 and the Nasdaq Composite (.IXIC) added 287.30 points, or 2.15%, to 13,619.66.

The advances were the largest of the three since March 16.

Ten of the S&P’s 11 major sub-sectors were up, led by consumer discretionary stocks (.SPLRCD). Among the index’s top performers are gaming companies, with Wynn Resorts Inc (WYNN.O), Caesars Entertainment Inc (CZR.O) and Penn National Gaming Inc (PENN.O) gaining between 4.9% and 5 .9%.

Energy stocks (.SPNY) fell 1% as oil prices fell 5.2% after the International Monetary Fund cut its growth forecast for the global economy and warned of higher inflation high.

Rising crude prices this year, which are still up about a third despite Tuesday’s declines, helped Halliburton Co (HAL.N) post an 85% jump in first-quarter adjusted profit as that the demand for its services and equipment increased. However, shares of the oil services company fell 0.8%, amid a broader plunge in energy stocks. Read more

Meanwhile, Twitter Inc (TWTR.N) fell 4.7%. According to reports, more private equity firms have expressed interest in participating in a deal for the microblogging site. Read more

Trading volume on U.S. exchanges was 10.53 billion shares, compared to an average of 11.67 billion for the full session over the past 20 trading days.

The S&P 500 posted 35 new 52-week highs and 11 new lows; the Nasdaq Composite recorded 70 new highs and 333 new lows.

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Reporting by Sruthi Shankar and Devik Jain in Bengaluru and David French in New York; Editing by Anil D’Silva and Arun Koyyur, Sriraj Kalluvila and Grant McCool

Our standards: The Thomson Reuters Trust Principles.

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