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Corporate earnings season continues this week.
AFP via Getty Images
The stock market continued its recent rally Wednesday, with technology stocks jumping. For the entire market, earnings remain in focus.
The
Dow Jones Industrial Average
ended up 48 points, or 0.2%, while the
S&P 500
rose 0.6% and the tech-heavy
Nasdaq Composite
gained 1.6%.
On Tuesday, all three major indexes gained more than 2% each. The Nasdaq is outperforming the other two indexes, as it is now up almost 12% from its lowest close of the year, while the Dow and S&P 500 are up 7% and 8% from their lows, respectively.
Driving the gains have been expectations that the Federal Reserve’s interest rate hikes, designed to reduce soaring inflation, will slow down by early next year as consumer demand wanes.
Solid earnings reports certainly aren’t hurting the market. So far, companies that beat both sales and profit estimates are seeing their stocks rise 1.3%, according to Evercore. Even companies that have missed profit expectations are getting a boost, as most stocks have been beaten down over a longer stretch of time.
Look no further than Netflix (ticker: NFLX), which beat earnings forecasts, but missed on sales and offered below-consensus third-quarter guidance. Still, the company lost fewer subscribers than expected in the last quarter, pushing its stock up 7.4%. It also helped boost shares of other streaming companies: Walt Disney (DIS) gained 3.7%, while Roku (ROKU) rose 6.9%.
Now, markets are looking ahead to
Tesla
(TSLA) earnings after the bell. Investors want to see strong demand for automobiles and if the stock makes a big move after earnings, it could move the Nasdaq, as Tesla’s $763 billion market capitalization is about 4% of the Nasdaq’s aggregate market cap. The stock was up 0.8% in Wednesday trading.
Overall, “Stocks are rising as Wall Street grows confident that corporate earnings might not fall off a cliff,” wrote Edward Moya, senior market analyst at Oanda.
Earnings aside, tech stocks have been the place to be in the past few weeks. They’re getting some help from long-dated bond yields remaining below their peaks. The 10-year Treasury yield, at about 3%, has remained below its 3.5% multiyear peak hit in mid June. Lower bond yields make future profits more valuable—and many fast-growing tech companies are valued on the basis that they’ll churn out a bulk of their profits many years in the future.
Here are some stocks on the move Wednesday:
Bath & Body Works
(BBWI) had fallen 3.2% after it lowered its guidance well below consensus forecasts.
Baker Hughes
(BKR) had declined 8.3% after its earnings and sales fell far short of analyst expectations.
A surge in cryptocurrency prices has buoyed stocks with exposure to digital assets. Crypto exchange
Coinbase Global
(COIN) rose 14% after a 12% gain on Tuesday while
MicroStrategy
(MSTR)—a software company with significant
Bitcoin
on its books—gained 8.1% following an 18% rally Tuesday.
Write to Jack Denton at jack.denton@dowjones.com and Jacob Sonenshine at jacob.sonenshine@barrons.com
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