Stocks rose on Wednesday after better-than-expected economic data and as Nancy Pelosi’s visit to Taiwan ended without any major repercussions.
In the midday trade, the
Dow Jones Industrial Average
rose by 442 points, or 1.4%, while the
added 1.6%, and heavy tech
Wednesday’s market action continues what has been a recent rally for the stock market. The Dow Jones is up around 9.4% from its 52-week low on June 17, while the S&P 500 and Nasdaq are up 13% and 18%, respectively, from their lows. from mid-June.
“Pelosi’s visit to Taiwan has shaken markets and markets have risen now that it is behind us,” wrote Louis Navellier, founder of Navellier and Associates, who called yesterday’s withdrawal a “brief opportunity to purchase in a market that wants to go higher”.
Investor sentiment had wavered a bit since House Speaker Nancy Pelosi (D., Calif.) arrived for her historic visit to Taiwan, an island at the heart of the global chip manufacturing industry that China considers as part of its territory. China has responded by planning drills around Taiwan that will be among the largest in nearly 30 years.
Still, after falling on Tuesday, stocks rebounded somewhat when Pelosi left Taiwan and no immediate military action was taken by China.
Geopolitical tensions provide a break from the most dominant macro forces that have moved markets lately – inflation at its highest level in four decades and the risk of recession due to the Fed’s shift to tackling prices hot with a much tighter monetary policy.
But these factors remained salient as US Treasury yields soared amid renewed focus on the Fed’s interest rate hike path. The central bank has already raised rates four times this year, including hikes of 75 basis points in June and July – the highest since 1994 – and is expected to continue while keeping inflation under control.
The yield on the benchmark 10-year note jumped to 2.78% on Wednesday after hitting 2.7% on Tuesday.
Better-than-expected economic data released on Wednesday also helped lift stocks. The ISM Non-Manufacturing Purchasing Managers Index rose to 56.7 in July from 55.3 in June. Analysts polled on FactSet had expected a reading of 53.5.
Dennis Debusschere, founder of 22V Research, said ISM’s internals were consistent “with what we’ve seen with manufacturing and what we’ve seen with easing the supply chain.”
“Delivery times from suppliers have improved, the prices paid have dropped significantly. So you have disinflationary aspects of the ISM at the same time as you had a stronger stock,” Debusschere added.
Investors are now awaiting Friday’s employment data from the Bureau of Labor Statistics to see if the labor market cooled at all in July. The BLS job openings and job rotation summary released Tuesday showed 10.7 million jobs were listed in June, the lowest level since September 2021. This could be a sign that the market burning work cools.
Raymond James strategist Tavis McCourt said Wednesday that looking at Friday’s employment expectations, “it’s a bit of bad news, it’s a good news type market environment right now. where we need to see bad news about the economy or a weakening economy to keep stocks moving higher.
McCourt added that the expectation is for weaker job growth, and any deviation from that expectation could lead to a move in stocks. A higher-than-expected job count would send stocks lower, while a lower number could spark another rally in the market.
Here are some actions in motion on Wednesday:
(ticker: MTCH) The stock fell 17% after the operator of online dating sites such as Tinder reported disappointing second-quarter results and delivered guidance below Wall Street estimates. The company also announced that Tinder’s chief executive, Renate Nyborg, is leaving the company.
(HOOD) gained 12%, reversing previous declines. The retail investor-focused trading platform said on Tuesday it would cut 23% of its workforce as it faces a trading downturn. Reporting its results earlier, the group revealed a bigger-than-expected second-quarter loss of 34 cents a share, as its monthly active users fell to 14 million, down 1.9 million from the first quarter. .
(MSTR) rose 12% even after the software group – which has a significant amount of Bitcoin on its balance sheet – announced that its CEO Michael Saylor, a top crypto bull, would step down and take on a chairman role. executive. The company reported a loss of $1.1 billion in the second quarter due to a bitcoin-sized hole worth around $918 million following the decline in crypto prices.
Bavarian automotive work
(BMW.Germany) fell 6.2% in Frankfurt trading after the automaker cut its full-year delivery outlook, which weighed on the stock, despite falling profits and revenue in the second quarter.
(ARNM) climbed 15%. The Covid-19 vaccine maker on Wednesday posted earnings and sales above Wall Street estimates.
(SBUX) reported quarterly results after Tuesday’s close that beat expectations for the first time this fiscal year. The stock was up 3.6% on Wednesday.
(SOFI) soared 28% on Wednesday, a day after the financial services firm posted record quarterly revenue and raised its guidance for fiscal 2022.
(CVS) climbed 5.8% after the drugstore retailer reported earnings above Wall Street estimates and raised its full-year forecast for the second consecutive quarter.
(UBER) gained 4.3% after receiving an analyst upgrade from Raymond James, who was positive on the company’s recent results.
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