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Bond, stock yields rise amid earnings

Major U.S. stock indexes rose on Tuesday as investors flocked to shares of companies across industries.

The gains were broad, with eight of the 11 S&P 500 sectors gaining.

The S&P 500 rose 37.67 points, or 0.8%, to 4521.54. The Dow Jones Industrial Average added 371.65 points, or 1.1%, to 35462.78. The tech-heavy Nasdaq Composite rose 178.79 points, or 1.3%, to 14194.45.

The S&P 500 is still down 5.1% in 2022 after the January sell-off.

“It seems like people are happy to buy this stock,” said Katie Nixon, chief investment officer at Northern Trust Wealth Management. “We have very strong markets here.”

Generally positive income season helped support the stock. With results from about 60% of S&P 500 companies, analysts expect profits to grow 30% in the fourth quarter from a year earlier, according to FactSet. This is up from an estimate of 21% growth at the end of September.

At the same time, some companies have use a wary tone about the road ahead. As of late last week, 34 companies in the S&P 500 had given first-quarter earnings guidance that was below analysts’ expectations, while 13 had given guidance above median earnings estimates. , according to FactSet.

“The guidance we are hearing from companies is understandably cautious,” said Tom Plumb, president and portfolio manager of Plumb Funds. “In some cases, it’s people’s anxiety about political and economic events and Federal Reserve policy.”

The market has been rotated by volatile trading in recent sessions, partly driven by expectations of higher interest rates. US Federal Reserve expected tightening comes against a backdrop of moderate growth and investors have been re-evaluating which companies are best positioned to weather a tougher outlook.

“The question is: Did the Fed get it right? Will they be on the right track between raising interest rates and tightening policy at a pace that helps curb inflation but doesn’t dampen demand and hurt the economy,” said Peter Langas, portfolio strategist investment at Bessemer Trust, said.

The Federal Reserve has signaled that it plans to raise interest rates in 2022 in response to high inflation. WSJ’s JJ McCorvey explains what a higher rate can mean for your finances. Illustration: Todd Johnson

Tech companies, the darlings of last year’s protest, were in at the forefront of investor reviews, as higher interest rates threaten to affect their expensive valuations, which rely on future growth expectations. Large-cap tech companies have been particularly volatile in recent days, exacerbating broader market volatility.

Shares of

Amazon.com

up 2.2% on Tuesday, while shares of

Apple

up 1.9%. Shares of

Facebook

parents

Meta . Platform,

in contrast, down 2.1%. Share meta fell sharply last week after the company surprised investors with a deeper-than-expected drop in profits and an upbeat outlook.

“Across the technology spectrum, investors will be more discerning about the fundamentals and long-term drivers of growth and strategy,” said Bessemer’s Mr. Langas. “Companies that are able to respond to threats aggressively will be rewarded and those that are struggling will be punished.”

Brent crude, the international oil benchmark, fell 2.1% to $90.78 a barrel. Investors are keeping an eye on talks about resurrecting a nuclear deal with Iran, as a deal could see sanctions on that country lifted, allowing it to export more more oil.

Falling oil prices contributed to a bleak tone for energy stocks, the worst performer in the S&P 500 on the day.

Chevron

shares fell 1.5% and

Exxon Mobil

shares fell 2.6%.

The earnings report prompted some moves Tuesday in individual stocks.

Pfizer

the stock fell $1.51, or 2.8%, to $51.70 after Vaccine manufacturers report revenue missed analysts’ forecasts.

Harley-Davidson

shares rose $5.61, or 16%, to $41.73 after the motorcycle maker turned in fourth-quarter profit.

Peloton Interactive

shares rose $7.52, or 25%, to $37.27 after the stationary bike maker said it would replace its CEO, overhauled its board and cut costs. The value of the company has plummeted amid dwindling demand.

Nvidia

shares rose another $3.80, or 1.5%, to $251.08 after the semiconductor giant said it had call off its blockbuster deal to buy Arm specialized in chip design.

Investors get out of bonds with the expectation that the Federal Reserve is ready to embark on a rate hike process. The yield on the benchmark 10-year US Treasury note rose to 1.954 percent, its highest close since July 2019, after settling at 1.915% Monday. Yields increase when prices fall.

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Traders on the floor of the New York Stock Exchange on Monday.


Photo:

Allie Joseph / Associated Press

Bitcoin traded at 5 p.m. ET Tuesday at $44,264.13, up 0.5% from 24 hours earlier. The cryptocurrency was trading above $45,000 earlier on Tuesday before analyzing its gains.

Abroad, the continent-wide Stoxx Europe 600 rose less than 0.1%. Asian stock markets were mixed. Japan’s Nikkei 225 added 0.1%, while in Hong Kong, the Hang Seng index fell 1%. In mainland China, the Shanghai Composite added 0.7 percent.

Write to Karen Langley at karen.langley@wsj.com and Will Horner at william.horner@wsj.com

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https://www.wsj.com/articles/global-stocks-markets-dow-update-02-08-2022-11644309070?mod=rss_markets_main Bond, stock yields rise amid earnings

Ian Walker

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