US stocks rose, putting major indexes on track to recover some of their losses on Wednesday after selling off sharply in the previous session.
The S&P 500 added 0.3% and the Dow Jones Industrial Average rose 0.6%. The technology-focused Nasdaq Composite Index rose 0.2%.
On Tuesday, the Nasdaq recorded its biggest one-day decline since September 2020, as the Dow fell more than 800 points as investors absorbed earnings reports and weighed their concerns about inflation, the prospect of a quick tightening of Federal Reserve policy and proliferation. of Covid-19 in China.
Major US stock indexes have already fallen significantly for the year, with the S&P 500 down 12% and the Nasdaq Composite falling 20% ahead of Wednesday’s session. On Tuesday, Nasdaq closed at its lowest level since December 2020, erasing the profits it recorded in 2021. The Russell 2000 index of small-cap companies also closed on Tuesday at its lowest level since December 2020.
Investors attributed the rise in US stock futures earlier in the day as a temporary relief. Siema Shah, chief strategist at Principal Global Investors, said she sees the next movements in the stock market to be either sideways or downward.
“Profits support the market to some extent, but I don’t think that’s enough to keep it higher,” Ms Shah said. She said her team had moved on to a neutral recommendation regarding their common equity positions.
“The risks are just piling up,” she said. “We don’t want to collect pennies in front of the steam roller.”
Many large companies are reporting profits this week, with results expected on Wednesday from companies including Meta Platforms, Facebook’s parent, and Ford Motor after the closing bell. Twitter, which this week agreed to sell for $ 44 billion to Elon Musk, will announce on Thursday.
Nearly 80% of the S&P 500 companies that have reported profits so far have exceeded analysts’ estimates, according to FactSet. Still, Emily Roland, a senior investment strategist at John Hancock Investment Management, said investors remain focused on a number of wide-ranging issues that weigh on markets.
“Markets are mostly focused on some of the macro concerns about the Fed’s aggressive tighter policies, as well as this fear of global growth that is unfolding,” she said.
Many of these fears have brought the dollar to its highest level in more than two years. The dollar tends to strengthen when the global economy deteriorates and when investors expect US growth to outpace the rest of the world. Rising interest rates in the United States also tend to benefit green money, as higher interest rates attract profitable investors to the currency.
The ICE US Dollar index, which tracks the currency against a basket of others, rose 0.7% to 103.06, at a pace to finish at its highest level since January 2017 and surpass even coronavirus challenges market decline since March 2020. Including Wednesday, the Index rose for all but two of the 18 trading sessions in April.
Meanwhile, the euro fell 0.8% against the dollar to about $ 1.06, its lowest level since 2017.
In the bond market, the yield on 10-year US government bonds fell to 2.766% on Wednesday from 2.773% on Tuesday. Recently, investors sold bonds in anticipation of higher interest rates, and the yield on the reference note remains close to its highest level since 2018. Bond yields and prices are moving backwards.
Natural gas prices in Europe rose 3.9% to 107.20 euros per megawatt-hour, equivalent to $ 113.15, after jumping more than 20% earlier on Wednesday. The moves come after Russia said it would cut off gas flows to Poland and Bulgaria for refusing to pay under Moscow’s new terms.
At the start of trading in New York, Tesla added 2.1%, at a rate to recover some of its losses after falling 12% on Tuesday, its biggest one-day decline in more than a year. Twitter fell 1.4 percent, about 9 percent below the $ 54.20 share that Elon Musk and Twitter agreed to in a private company deal.
Microsoft jumped 4.4 percent after reporting higher revenue and profit in the last quarter on Tuesday as demand for cloud services and software continued to grow.
On Tuesday, the Nasdaq Composite registered its biggest one-day percentage drop since September 2020, while the Dow fell more than 800 points.
Photo: Michael Nagle / Zuma Press
Chipotle Mexican Grill added 4.1% after the burrito chain said total revenue rose 16% in the last quarter amid higher food, beverage and packaging costs – which the company said was partially offset by the increase the prices in the menu.
Lucid Group won 5.2% after the company said late Tuesday that the Saudi government had agreed to buy up to 100,000 vehicles over a 10-year period.
In contrast, Alphabet, a parent of Google, fell 4.7 percent after the technology giant saw slower sales growth amid disruptions in digital advertising spending.
Robinhood Markets fell 3.8% after the online broker said it was cutting 9% of its full-time employees. The company is due to report its profits on Thursday.
For commodities, crude Brent, the international benchmark for oil prices, fell 1.3 percent to $ 103.26 a barrel.
Abroad, European stocks rose, with Stoxx Europe 600 adding 0.5%. The Swiss chemical company Clariant led to gains in the index, jumping 10% after the company said it had completed an investigation into accounting problems and that its chief financial officer had decided to step down. Deutsche Bank shares fell 4.7% despite a jump in earnings in the first quarter. Warnings about costs and a drop in the key capital-buffer ratio have worried investors.
Major markets in Asia were mixed, with benchmarks in Japan and South Korea falling by more than 1% and Chinese indices rising.
The CSI 300 index of the largest stocks registered in Shanghai and Shenzhen rose 2.9%, recovering some of its recent losses. In Hong Kong, the Hang Seng index rose 0.1%.
The recovery came after China on Tuesday reported its lowest number of Covid-19 cases in three weeks, and President Xi Jinping stressed the importance of infrastructure for economic growth by separating transport, energy and water protection. Stocks of machinery and construction materials jumped.
How the biggest companies perform
Write to Dave Sebastian at dave.sebastian@wsj.com
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