The S&P 500 and the Nasdaq hit record highs. Growth concerns boosted tech stocks.

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Corporate profits have far exceeded Wall Street expectations this season.

Angela Weiss / AFP / Getty Images

The S&P 500 and Nasdaq Composite closed at record highs Thursday, pushed by investors worried about the economy. They bought the relative safety of tech stocks.

The


S&P 500

gained 1% to close at 4,596.42 and the tech-rich Nasdaq rose 1.4% to close at 15,448.12. The Dow Jones Industrial Average rose 239 points, or 0.7%, after the index fell 266 points on Wednesday.

Tech stocks are seen as capable of growing even when economic growth is uncertain. And right now, economic growth is uncertain. Third-quarter GDP rose 2%, missing an estimate of 3.5%, the worst performance since the June 2020 quarter. GDP data showed inflation is eating away at economic growth, wrote Peter Boockvar, Chief Investment Officer of Bleakley Advisory Group.

“This is one of the things that has helped large cap technology, maybe it’s [economically] slow down a bit, ”said Rhys Williams, chief investment officer at Spouting Rock Asset Management.

The first jobless claims were, however, better than expected: 281,000 against 289,000 expected.

This economic uncertainty is also reflected in the bond market. The 10-year Treasury yield fell to 1.57% from 1.7% a week ago, reflecting lower long-term inflation and economic demand expectations after the Federal Reserve signaled it could start raising interest rates in 2022. This is also evident in the two one-year Treasury yields, which rose to 0.5% from 0.46% a week ago.

The “flattening” of the yield curve was “primarily driven by the Fed’s rate hike expectations which have skyrocketed in recent weeks,” said Tony Bedikian, head of global markets at Citizens Bank . “Inflation has lasted much longer than the Fed expected and the markets are following suit.”

Strong earnings reports have given the stock market a boost. The overall earnings per share of the S&P 500 exceeded analysts’ estimates by around 12%, according to Credit Suisse. Beating companies see their stocks outperforming the S&P 500 by 0.8 percentage points, but missing ones underperforming by 3.7 percentage points.

“Partly, the income fuels part of the movement [in stocks] up, ”Bedikian said.

Profits remain in the spotlight, with Big Tech heavyweights


Apple

(ticker: AAPL) and


Amazon

(AMZN) reporting the results. These stocks rose 2.5% and 1.6%, respectively, ahead of earnings.

Business and economic fundamentals aside, money is poised to pour into stocks, boosting the market lately. The S&P 500 is up more than 6% from its Oct. 4 low after a pullback, retail investors – those who trade stocks on popular platforms like Robinhood – bought the decline.

“It’s always a matter of liquidity that always plays out in the stock markets,” Bedikian said.

Overseas, Hong Kong


Hang Seng Index

fell 0.4% as the woes of the heavily indebted Chinese real estate sector remained in the foreground. Developer under siege


China Evergrande

(3333.HK) faces deadline for an offshore bond payment on Friday. The pan-European


Stoxx 600

was 0.2% higher after the European Central Bank kept its policy unchanged, but said it would “moderately” slow the pace of its asset purchase program.

Here are five actions in motion:


Ford

(F) jumped 9% after the automaker’s profits on Wednesday night saw profits exceed expectations. Ford also raised its full-year profit forecast and relaunched its quarterly dividend. The company raised its operating profit estimate by around 16% to $ 11 billion in the middle of its forecast range. Goldman Sachs analysts said prices are expected to be strong going forward. Analysts have raised their price target to $ 18 per share from $ 17.


Altria Group

Shares (MO) fell 6% after the company reported earnings of $ 1.22 per share, missing estimates of $ 1.26 per share, on sales of $ 6.8 billion, at- above expectations of $ 5.7 billion.


MasterCard

The stock (MA) first gained, then fell 0.7% after the company reported earnings of $ 2.37 per share, beating estimates of $ 2.19 per share, for a single figure business of $ 4.99 billion, higher than expectations of $ 4.9 billion.


Stanley Black & Decker

(SWK) fell 0.6% after the company reported earnings of $ 2.77 per share, beating estimates of $ 2.47 per share, on revenue of $ 4.3 billion , in accordance with expectations.


BJ’s Wholesale Club Holdings

The stock (BJ) fell 2.1% after being demoted to Neutral to Buy at Bank of America.

Write to Jacob Sonenshine at [email protected]


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