Stocks Surge on Strong Earnings as Tech Giants Prepare to Report
Equities extended their gains on Tuesday as upbeat corporate earnings eased concerns over higher interest rates. The S&P 500 climbed 317 points, or 0.8%, while the Nasdaq Composite gained 1.2%, and the Dow Jones Industrial Average ticked up 1.6%.
Strong Earnings Drive Market Rally
Several companies reported better-than-expected quarterly results, fueling the rally. United Parcel Service (UPS) surged nearly 16% after surpassing Wall Street’s first-quarter estimates and issuing rosy second-quarter guidance. Amazon shares edged 2% higher after the delivery giant posted better-than-expected quarterly earnings.
Meanwhile, Tesla dipped 2.4% despite reporting better-than-expected earnings. Shares of Spotify added roughly 7% after the company reported an earnings beat.
Tech Earnings in Focus
Alphabet, the parent company of Google, and Meta Platforms are slated to report earnings after the bell, followed by Apple on Wednesday afternoon. These technology-heavy companies will provide insights into the health of the sector. Roughly 20% of the S&P 500 has reported earnings through Tuesday morning. Of those companies, 76% have beaten analysts’ expectations, FactSet data shows.
Investors Weigh Inflation and Interest Rates
Tuesday’s moves come after an upbeat session on Wall Street. Investors bought the dip in tech stocks after a recent sell-off in key names such as Alphabet and Meta Platforms, which had been dinged recently amid fears of higher inflation and the prospect of elevated interest rates.
Treasury Yields Pull Back
Treasury yields pulled back after U.S. manufacturing data hit a four-month low. The ISM Manufacturing Index read 49.9, down from 51.9 in March. The benchmark 10-year Treasury was last 3.5 basis points lower at 4.588%.
Economic Outlook and Geopolitical Tensions
JPMorgan Chase CEO Jamie Dimon said Tuesday that the American economy remains strong but could tip into a period of “stagflation.” He warned of high inflation, unemployment, and slowed growth. Despite that concern, he said the American economy has continued to boom.
Dimon also said the current geopolitical situation is likely the “most complicated and dangerous” since World War II.
Other Notable Developments
– Cathie Wood’s flagship fund ARK Innovation has suffered big outflows this year as investors grew disappointed about its underperformance.
– General Motors stock climbed 4.2% after the automaker beat Wall Street estimates in the first quarter and raised its full-year earnings forecast.
– New residential home sales accelerated in March at a faster-than-expected pace as mortgage rates declined.
– Manufacturing and services activity hit multimonth lows in April, indicating a potential slowdown in U.S. economic growth.
– Shares of Spotify jumped 13% after the streaming music company beat expectations on both earnings and revenue in the first quarter.
– Oil prices dipped Tuesday as fears of a wider conflict between Iran and Israel dissipated.
– Stocks opened higher on Tuesday as investors focused on a fresh slate of forthcoming tech earnings.
– European stocks opened higher Tuesday, with the benchmark index up 0.5%.
– The Japanese yen weakened to a fresh 34-year low against the U.S. dollar Tuesday.
– China’s manufacturing activity expanded at its fastest clip in 24 months in April, according to flash figures from S&P Global.
As earnings season continues, investors will closely monitor corporate results and economic data to assess the health of the economy and the impact of higher interest rates.
