Wall Street closes sharply higher on strong corporate earnings

Wall Street closes sharply higher on strong corporate earnings

  • Boeing has decided to sell the planes to 777 Partners
  • Johnson & Johnson and IBM fall on dollar impact warning
  • Halliburton, Hasbro, Truist rise after earnings beat
  • Indexes rise: Dow 2.43%, S&P 500 2.76%, Nasdaq 3.11%
  • Nasdaq’s biggest one-day percentage gain since June 24

July 19 (Reuters) – U.S. stocks closed with strong gains on Tuesday as more companies joined big banks in reporting earnings that beat forecasts, offering relief to investors worried about higher inflation and a tightening Fed that harms corporate profits.

The S&P 500 (.SPX) gained 2.8%, its highest close since June 9. The tech-heavy Nasdaq Composite (.IXIC) added 3.1%, its biggest one-day percentage gain since June 24.

Shares of Halliburton ( HAL.N ) rose 2.1% after the oilfield services provider reported a 41% jump in adjusted quarterly profit. read more Toymaker Hasbro Inc ( HAS.O ) gained 0.7% after reporting quarterly profit ahead of expectations. Read more

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Truist Financial Corp also beat market estimates for quarterly profit as the bank’s shares gained 2.6%.

“Earnings were better than lower expectations,” said Paul Kim, CEO of Simplify Asset Management in New York.

“So we’re not seeing a bite of tighter monetary policy and inflation impacting incomes as strongly as we feared.”

Johnson & Johnson shares lost 1.5%, reversing earlier gains. The healthcare giant reported profit and revenue that beat expectations, but cut its profit outlook for the year due to a surging U.S. currency. Read more

A strong dollar also weighed on shares of IT hardware and services company IBM Corp ( IBM.N ), which on Monday beat expectations for quarterly revenue but warned that the hit from forex for the year could be about $3.5 billion.

A sign on Wall Street outside the New York Stock Exchange in New York, New York, U.S., October 2, 2020. REUTERS/Carlo Allegri

The U.S. dollar posted its third straight day of declines as markets downgraded the likelihood of a full percentage point hike by the Federal Reserve this month.

Spiraling inflation initially led markets to raise interest rates by 100 basis points at the Fed’s upcoming meeting later this month, until some policymakers signaled a 75 basis point hike. Read more

The Dow Jones Industrial Average (.DJI) rose 754.44 points, or 2.43%, to 31,827.05, the S&P 500 (.SPX) added 105.84 points, or 2.76%, to 3,936.69 and The Nasdaq Composite added (3,530.1 points) 3.11% to 11,713.15.

“The macro picture hasn’t changed,” Kim said. “We still have declining earnings, high inflationary pressures and a tightening Fed. So, in the long run, I don’t think this type of rally has staying power.”

This earnings season, analysts expect the S&P 500’s total year-over-year gain to rise 5.8%, according to Refinitiv data, down from an estimate of 6.8% at the start of the quarter.

Volume on U.S. exchanges was 10.95 billion shares, compared to a full-session average of 11.76 billion over the past 20 trading days.

Advancing issues outnumbered declining issues on the NYSE by a ratio of 4.88 to 1, and on the Nasdaq a ratio of 3.40 to 1 favored the advanced.

The S&P 500 posted one new 52-week high and 30 new lows; The Nasdaq Composite posted 31 new highs and 56 new lows.

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Echo Wang reporting in New York; More news from Shreyashi Sanyal and Aniruddha Ghosh in Bengaluru; Editing by Arun Koyyur, Shounak Dasgupta and Deepa Babington

Our standards: Thomson Reuters Trust Principles.

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