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Dow gains more than 600 points as investors bet on better-than-expected earnings

Stocks rallied on Tuesday, recouping losses suffered in the previous session, as traders bet on strong corporate earnings reports.

The Dow Jones Industrial Average jumped 626 points, or 2.02%. The S&P 500 gained 2.36% and the Nasdaq Composite rose 2.69%.

Investors weighed the latest round of earnings reports that showed companies weathered economic pressures better than expected in the second quarter, even as recession fears persist.

“Investors and businesses were expecting high inflation, so companies that were talking about high inflation in this second quarter were no surprise at all,” said Kim Forrest, Founder and Chief Investment Officer. at Bokeh Capital Partners. “What was a surprise was that they were able to pull it off pretty well.”

All sectors of the S&P 500 were up on Tuesday. Bank stocks outperformed with shares of Goldman Sachs up more than 4% after a strong earnings report on Monday. Bank of America climbed almost 3% and Wells Fargo about 3%.

Google rose more than 2% following a 20-to-1 stock split that took place on Monday.

Twitter shares gained 4%. On Tuesday, the social media platform won a motion for an expedited trial in its lawsuit against Elon Musk, as the investor tries to walk away from a $44 billion deal to acquire the company.

Halliburton’s shares rose more than 1% on the sharp rise in oil prices this year, which helped boost the company’s earnings in its latest quarter.

Hasbro shares climbed 1% after the toymaker’s earnings per share beat analysts’ expectations, although its revenue for the prior quarter came in slightly below expectations, according to consensus estimates from Refinitiv.

Shares of Netflix jumped 4% ahead of the streaming company’s earnings report expected after the close. Later in the week, Tesla, United Airlines, American Airlines, Snap, Twitter and Verizon are among those due to report.

Meanwhile, a stronger dollar weighed on some companies’ results. IBM shares fell more than 6% after the tech company lowered its cash forecast, with IBM chief financial officer Jim Kavanaugh citing the U.S. dollar and a suspension of business in Russia. Still, the company reported results that beat Wall Street earnings and revenue estimates.

Johnson & Johnson shares fell 1% after the pharmaceutical giant blamed a stronger dollar while cutting its full-year revenue and profit forecast. The company announced results above and below expectations.

So far, about 9% of S&P 500 companies have reported results for the second calendar quarter. Of those, about two-thirds beat analysts’ expectations, according to FactSet data.

Wall Street is betting stocks have mostly priced a downturn after their steep declines this year, although some advisers continued to recommend investors hold on to cash and prepare for further losses ahead.

“[While] I recognize the sentiment is bad and we could see a big tactical rally, I am currently more concerned about protecting the downsides than losing the upsides, overall,” wrote Wedbush analyst Kevin Merritt , in a Tuesday note.

On Monday, the Dow fell more than 200 points to end the day in the red, reversing an early morning rally fueled by strong earnings reports from Goldman Sachs and Bank of America.

Late in Monday’s session, stocks were dragged lower by a Bloomberg report that Apple would slow hiring and growth spending next year to prepare for a potential economic slowdown. Shares of the iPhone maker ended the day down about 2.1%.

“Trading is likely to remain very choppy, with more bear market rallies, in the months ahead,” Chris Senyek of Wolfe Research wrote in a Tuesday note.

Dow gains more than 600 points as investors bet on better-than-expected earnings

Source link Dow gains more than 600 points as investors bet on better-than-expected earnings

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