Nasdaq finished up 1.6%, leading indexes to back-to-back gains
U.S. stock indexes finished higher Wednesday, extending gains from the previous session after Netflix earnings came in better-than-feared, which boosted investor confidence as they await more corporate results.
How are stock indexes trading
- The Dow Jones Industrial Average DJIA was up 47.79 points, or 0.2%, to 31,874.84.
- The S&P 500 SPX gained 23.21 points, or 0.6%, at 3,959.90.
- The Nasdaq Composite COMP jumped 184.50 points, or 1.6%, to trade at 11,897.65.
On Tuesday, the Dow Jones Industrial Average rose 754 points, or 2.4%, while the S&P 500 jumped 2.8% and while the Nasdaq Composite gained 3.11%. Showing the breadth of gains, 491 components of the S&P 500 advanced.
What’s driving markets
Investors are hoping that a survey released earlier this week showing fund managers at their most bearish since the great financial crisis means sentiment can only improve from here, sparking a further rally off recent lows for stocks.
The S&P 500 and Nasdaq 100 sit above their 50-day moving averages for the first time in nearly three months, potentially signaling the downtrend finally has been broken after S&P 500 shed more than 20% so far this year.
“No one expected Netflix to trigger a decent risk-on rally for the other mega-cap tech stocks, but that is exactly what is happening,” said Edward Moya, Senior Market Analyst, for the Americas at OANDA. “Stocks are rising as Wall Street grows confident that corporate earnings might not fall off a cliff. Pessimism won’t be completely going away as two major risk events are in the next 24 hours; the ECB rate hiking decision and the Russian decision on how much gas to let flow through the Nord Stream 1 pipeline. “
About 12% of S&P 500 index companies have reported earnings so far this quarter and of those, 68% have beaten analyst expectations, according to FactSet.
Electric vehicle maker Tesla reported earnings after the market close Wednesday.
Kristina Hooper, chief global market strategist at Invesco, said she is especially focused on the outlooks and guidance by companies. “Are there specific themes that we hear from multiple companies, especially in different industries?” Hooper said. “The earnings are just looking in the rearview mirror.”
In U.S. economic data, existing home sales fell 5.4% to a seasonally adjusted annual rate of 5.12 million in June, the National Association of Realtors said Wednesday. This is the weakest level of sales since June 2020, during the COVID-19 lockdown. Economists polled by The Wall Street Journal expected sales to be 5.36 million.
“The housing market is still processing the new regime of higher borrowing costs, high inflation, and weakening consumer demand,” said Jeffrey Roach, chief economist for LPL Financial in an email. “Some cash buyers are most likely investors but also buyers who are moving from higher-priced areas such as the west coast to lower-priced areas such as the southeast…Given the time required for residential real estate markets to adjust, we may see this housing slowdown phase continue throughout the rest of this year.”
Looking ahead, investors will be watching to see if the European Central Bank raises its benchmark interest rate by 25 or 50 basis points at its policy meeting on Thursday. With inflation at a record high of 8.6% in the eurozone, the ECB is ready to make its first interest-rate hike in 11 years.
The European Union Wednesday proposed a plan to cut gas use by 15% until March as it prepares for the “likely scenario” that Russia could halt gas exports to retaliate for European sanctions over its invasion of Ukraine.
Companies in focus
- Netflix NFLX was up 7.4% after reporting it lost half as many subscribers as feared in the second quarter and expects to add even more in the current quarter. Its streaming peers Walt Disney Co. DIS and Paramount Global PARA rose 3.8%.
- Shares of Biogen Inc. BIIB lost 5.8% Wednesday after the company missed on revenue in the second quarter of the year.
- Shares of Baker Hughes Co. BKR tanked 8.3% Wednesday, after the oilfield products and services company reported second-quarter results that missed expectations, as component shortages, supply chain inflation and the suspension of Russian operations weighed on results.
- AMC Entertainment Holdings Inc. AMC shares gained 7.1%, after the movie theater operator and “meme” stock said it paid about $50 million to repurchase about $72.5 million of its 10% second lien debt due 2026, representing about a 31% discount.
- Bath & Body Works Inc. BBWI shares rose 3.3% Wednesday after the retailer issued a downward revision of its second-quarter and full-year guidance.
- Amazon.com Inc. AMZN and Microsoft Corporation MSFT, two of the tech megacaps on Nasdaq, rose 3.8% and 1.1%, respectively.
How are other assets faring
- Oil futures settled lower on Wednesday. West Texas Intermediate crude for August delivery CL CLQ22 fell $1.96, or 1.9%, to $102.26 a barrel on the New York Mercantile Exchange. September Brent crude BRN00 BRNU22, the global benchmark, lost 43 cents, or 0.4%, at $106.92 a barrel on ICE Futures Europe.
- The 10-year Treasury yield BX:TMUBMUSD10Y advanced 1.8 basis points to 3.035% from 3.017% in the previous session.
- Gold futures for August delivery GCQ22 GC00 fell $10.50, or 0.6%, to settle at $1,700.20 an ounce, its lowest since late March 2021.
- The ICE U.S. Dollar index DXY was 0.3% higher in Wednesday dealings.
- Bitcoin BTCUSD advanced 1.1% to $23,661.
- Asian markets got a lift from Wall Street’s powerful showing overnight, with tech leading the way. Hong Kong’s Hang Seng HK:HSI rose 1.1%, the Shanghai Composite CN:SHCOMP climbed 0.8%, and Japan’s Nikkei 225 JP:NIK jumped 2.7%.
- In Europe, the STOXX 600 XX:SXXP was down 0.2% and London’s FTSE UK:UKX fell 0.4%.