- Baker Hughes falls on missing Q4 profit estimates
- Activist investor Elliott Management is taking a stake in Salesforce
- Chips grow on Barclay’s upgrade
- Indexes up: Dow 0.76%, S&P 1.19%, Nasdaq 2.01%
NEW YORK, Jan 23 (Reuters) – Wall Street closed sharply higher on Monday, fueled by a rally in technology stocks, as investors kicked off an earnings-heavy week with renewed enthusiasm for market-leading momentum stocks that took a hit last year.
All three major stock indexes extended Friday’s gains, with the tech Nasdaq leading the pack, boosted by semiconductor stocks ( .SOX ).
“(Chips are) a depressed group, so I’m not too surprised,” said Peter Tooze, president of Chase Investment Counsel in Charlottesville, Virginia. “We will see earnings from these companies over the next few weeks and that will be where the rubber meets the road.”
“This is a group that was ripe for a rebound.”
The session marked the calm before the storm in a week full of high-profile earnings reports and a tail end loaded with important economic data.
Investors are all but certain that the Federal Reserve will implement a modest rate hike next week, even as the U.S. central bank remains committed to taming the hottest inflation cycle in decades.
“(Investors) are pretty comfortable that they’re going to see lower rate hikes from the Fed, that we’re turning the corner on inflation and rate hikes,” Tooze added. “Equities can perform well in this environment, especially high-growth stocks that drive the market.”
Financial markets estimated a 99.9% chance of a 25 basis point increase in the Fed’s target funds rate at the end of next Wednesday’s two-day monetary policy meeting, according to CME’s FedWatch tool.
The Dow Jones Industrial Average (.DJI) rose 254.07 points, or 0.76%, to 33,629.56, the S&P 500 (.SPX) gained 47.2 points, or 1.19%, to 4,019.81 , and the Nasdaq Composite (.IXIC) added 223.98 points, or 2.01%, to 11,364.41.
Of the S&P 500’s 11 major sectors, all but energy ( .SPNY ) finished in the green, with technology stocks ( .SPLRCT ) enjoying the biggest percentage gain, up 2.3% on the session.
The fourth-quarter reporting season is back on track, with 57 of the companies in the S&P 500 reporting results. Of those, 63% delivered better-than-expected earnings, according to Refinitiv.
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., December 7, 2022. REUTERS/Brendan McDermid
Analysts now see the S&P 500’s overall fourth-quarter earnings falling 3% year over year, nearly twice as sharp as the 1.6% annual decline seen at the start of the year, according to Refinitiv.
This week, Microsoft Corp ( MSFT.O ) and Tesla Inc, along with a string of hard-hit industrials including Boeing CO ( BA.N ), 3M Co ( MMM.N ), Union Pacific Corp ( UNP.N ), Dow Inc ( DOW.N) and Northrop Grumman Corp (NOC.N) are expected to post quarterly results.
The Philadelphia semiconductor index SE (.SOX) jumped 5.0%, its biggest one-day gain since Nov. 30, after Barclays upgraded the sector to “overweight” from “equal weight.”
Tesla jumped 7.7% after Chief Executive Elon Musk took the stand in his fraud trial related to a tweet saying he had support to take the electric car maker private.
Baker Hughes Co ( BKR.O ) missed estimates for quarterly profit due to inflationary pressures and continued disruptions due to Russia’s war against Ukraine. The oil services company’s shares fell 1.5%.
Cloud software firm Salesforce Inc ( CRM.N ) jumped 3.1 percent on news that activist investor Elliot Management Corp had taken a multibillion-dollar stake in the company.
Spotify Technology SA (SPOT.N) has joined a growing list of tech-related companies to announce upcoming job cuts, shedding 6% of its workforce as rising interest rates and the looming possibility of a recession continue to put pressure on growth stocks. The music streaming company’s shares rose 2.1%.
On the economic front, the US Commerce Department is expected to release its initial “preliminary” view of fourth-quarter GDP on Thursday, which analysts expect to reach 2.5%.
On Friday, the broad-based Personal Consumer Expenditure (PCE) report should shed light on consumer spending, income growth and, above all, inflation.
Advancers outnumber decliners on the NYSE by a ratio of 2.77 to 1; on the Nasdaq, a ratio of 1.73 to 1 favors the advancers.
The S&P 500 posted 11 new 52-week highs and no new lows; The Nasdaq Composite posted 82 new highs and 19 new lows.
Volume on US exchanges was 11.99 billion shares, compared to an average of 10.62 billion over the past 20 trading days.
Reporting by Stephen Culp; Additional reporting by Shreyashi Sanyal and Johann M Cherian in Bengaluru Editing by Marguerita Choy
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