Stocks shoot up after back-to-back losing days

Stocks shoot up after back-to-back losing days

U.S. stocks rallied on Wednesday, recouping this week’s losses, as investors pushed through the earnings season and weighed upbeat economic data from the services sector.

The S&P 500 rose 1.6% and the Dow Jones Industrial Average gained 450 points, or about 1.4%. The tech-heavy Nasdaq Composite rose 2.6%.

Bonds also advanced after a Fedspeak Tuesday, with the benchmark 10-year Treasury yield near 2.8% and the 2-year yield above 3.1%.

Economic data released on Wednesday that showed the U.S. services sector rebounded in July helped boost sentiment. The ISM services PMI rose to 56.7 percent last month from June’s reading of 55.3 as supply chain woes appeared to ease.

Shares of Robinhood ( HOOD ) rose more than 13%, a day after the brokerage said it would lay off nearly a quarter of its staff and posted its sixth straight quarterly loss.

Shares of CVS ( CVS ) rose 5% after the drugstore chain reported earnings that beat estimates and raised its full-year guidance.

Shares of Starbucks ( SBUX ) rose 3% after the coffee shop late Tuesday reported fiscal third-quarter profits that largely beat Wall Street estimates despite inflationary pressures, labor costs, efforts of unionization and the search for a permanent CEO overshadowed the quarter.

Meanwhile, shares of AMD ( AMD ) fell nearly 4% after the chipmaker warned of a worse-than-expected third quarter late Tuesday.

As economic data shows signs of slowing and companies continue to tone down their outlooks, analysts are making larger-than-average cuts to earnings per share estimates for S&P 500 companies for the third quarter. Wall Street cut its consensus EPS estimate from below by 2.5% from June 30 to July 28, according to FactSet data. Over the past five years, or 20 quarters, the average decline in the bottom-to-top EPA estimate in the first month of a quarter has been 1.3%.

The exterior of the Marriner S. Eccles Federal Reserve Board building is seen in Washington, DC, U.S., June 14, 2022. REUTERS/Sarah Silbiger

In commodity markets, OPEC and its allies gave the green light to a small increase of about 100,000 barrels a day in oil production after calls from the US and other big consumers for more supply. The move, while symbolic, is expected to have little impact on prices. Crude oil retreated from daily highs in the afternoon, with WTI (CL=F) above $92 a barrel and Brent (BZ=F) around $98.20.

The story continues

Wednesday’s moves follow a down day on Wall Street in which stocks closed lower for a second straight session amid a high-stakes visit to Taiwan by House Speaker Nancy Pelosi that sparked concerns about US-China relations.

On Tuesday, investors digested Fedspeak that suggested more interest rate hikes were on the way in the central bank’s efforts to curb inflation. San Francisco Fed President Mary Daly said Tuesday that policymakers were “resolute and completely united” in their goal of restoring price stability, and Chicago Fed President Charles Evans told reporters that officials were “at least a couple of reports away” from seeing enough improvement in inflation data to slow the pace of rate hikes.

Meanwhile, the president of the Federal Reserve of St. Louis, James Bullard said the US Federal Reserve and the European Central Bank can still achieve a “relatively soft landing” while tightening monetary conditions.

“I think the story in the markets is still, ‘What’s going on with the Fed?’ What’s going on with the tightening?'” Manulife Investment Management global macro strategist Eric Theoret told Yahoo Finance Live on Tuesday. “When it comes to geopolitics, it’s not really driving market movement at the moment.”

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

Click here for the latest stock market news and in-depth analysis, including the events that move stocks

Read the latest financial and business news from Yahoo Finance

Download the Yahoo Finance app for apple or android

Follow Yahoo Finance at Twitter, Facebook, Instagram, Flipboard, LinkedIni YouTube


Source link

You May Also Like

About the Author: Chaz Cutler

My name is Chasity. I love to follow the stock market and financial news!