March 27, 2023

Brighton Journal

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Stocks closed higher for the third day in a row, Nasdaq up 2.2% ahead of big tech earnings

Stocks closed higher for the third day in a row, Nasdaq up 2.2% ahead of big tech earnings

Stocks closed higher in another session on Tuesday, as investors evaluated falling yields and new data for more clues on the health of the US economy.

The Dow Jones Industrial Average closed up 337.12 points, or about 1.1%, to close at 3,1836.74 points. The S&P 500 advanced 1.6% to close at 3,859.11. The Nasdaq Composite Index rose 2.2%, falling at 11,199.12.

Tuesday’s moves added to the sharp rises seen in the previous two sessions. On Monday, the Dow and S&P 500 rose more than 1% each, while the Nasdaq advanced 0.9%. On Friday, the Dow rose more than 700 points.

a A drop in bond yields Contributed to recent gains. The yield on the benchmark 10-year Treasury was down about 15 basis points at 4.087%. The 2-year Treasury yield was finally down 3 basis points at 4.473%.

Taken together, yields and key index moves are signs that investors are “doubling up on expectations with Fed easing,” said Cliff Hodge, chief investment officer at Cornerstone Wealth.

Hodge said Tuesday’s economic data is also a point of hope for investors looking to change course on raising interest rates as the central bank tries to bring down inflation.

The S&P CoreLogic Case-Shiller 20-City House Price Index released on Tuesday showed Home prices have fallen 1.3% in the 20 core cities studied month after month in August, but it’s still 13.1% higher than it was a year ago. Consumer Confidence Index fell tooindicating that the outlook for the economy has soured after two months of improved forecasts.

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“It’s a rainbow after a very big storm,” Paul Zemsky, chief investment officer for multi-asset strategies and solutions at Voya Investment Management, said of bond moves and inflation data. “We’re seeing enough slowdowns in the economy that we don’t have to worry about the Federal Reserve raising rates beyond what is already priced.”

“I think we are finally at the place where the market has identified the right amount of Fed tightening,” he added. Once this is done, market uncertainty decreases and we could see higher prices.

On top of that, traders were dictating a lot of company reports. General Motors and Coca-Cola rose 3.6% and 2.4%, respectively, after reporting stronger-than-expected earnings. Xerox fell 14% after earnings per share came in less than half of what was expected.

So far this season, companies have proven that they may be doing better than expected. FactSet data shows that as of Tuesday morning, 71% of companies reporting beat analyst expectations for earnings per share.

Wall Street has its eye on Big Tech’s quarterly earnings. Alphabet and Microsoft will release the results the Tuesday after the bell. Meta, Amazon, and Apple platforms follow later in the week. Due to its sheer size and market capitalization, any moves are likely to drive the market forward.

Correction: An earlier version of this article misspelled Microsoft Earnings Day.