February 22, 2024

Strong Corporate Earnings See Wall Street Close Higher

On Tuesday, US stocks ended the trading session with some sharp gains, with more companies joining the ranks of big banks in bearing forecasts in terms of earnings. This gave investors some respite, as they had been worried about high inflation and the corporate bottom line taking a hit because of it and the tightening of the US Federal Reserve.

Indexes gain

There was a 2.8% gain in the S&P 500 that took it to its highest closing level not seen since June 9th. As for the Nasdaq Composite, which is tech-heavy, there were 3.1% gains for the day, which made it its biggest percentage rise in a single day since June 24th.

There was a gain of 2.43% in the Dow Jones Industrial Average, which saw it rise by 754.44 points to close at 31,827.05. The Nasdaq Composite saw gains of 3.11% that amounted to 353.10 points and brought the index to a closing value of 11,713.15. The S&P 500 rose by 105.84 points, which is around 2.76%, and it ended at 3,936.69.

Stock performance

There was a 2.1% rise in the shares of Halliburton, as a 41% increase was posted by the oilfield services provider in its adjusted profit for the quarter. There was also a 0.47% gain in toymaker Hasbro Inc. because its quarterly profit turned out to be better than expectations.

The shares of Truist Financial Corp also notched gains of about 2.6%, as the bank was also able to exceed expectations where its quarterly profit is concerned. Market analysts said that earnings were proving to be better than expectations, which had been quite low. Therefore, there is not much impact of a tighter monetary policy, or surging inflation, as had been feared.

Stronger dollar

There was a 1.5% loss in the shares of Johnson & Johnson, which saw the company reverse gains made earlier in the session. The sales and profit of the healthcare giant were better than expectations, but a stronger greenback caused it to reduce its earnings outlook for 2022.

A stronger US dollar also took its toll on the shares of IBM Corp. The IT hardware and services company had been able to beat the expectations in terms of its quarterly revenue on Monday. However, the company warned that it could take a hit of $3.5 billion because of the forex situation.

But, the US dollar saw declines for the third straight day, as odds of a 100 basis points interest rate increase by the US Federal Reserve had come down. Soaring inflation had pushed markets to price in a super-sized hike in the rates in the meeting of the US Fed scheduled for next week.

However, some policymakers indicated that a 75 basis points increase was more likely. Market analysts said that there was not much of a change in the macro picture, as earnings were falling, inflation pressures remain high and the Fed continues to tighten. This makes it unlikely for the rally to last for long.

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