On Tuesday, the Nasdaq led Wall Street’s key indexes higher, with investors focusing on solid earnings reports and putting aside concerns about forceful policy measures to combat inflation.
Even as Treasury yields continued to rise, shares of mega-cap corporations such as Microsoft Corp, Apple Inc, and Amazon.com Inc climbed between 0.9 percent and 3.0 percent.
Johnson & Johnson (JNJ.N) surged 3.5 percent to a new high after the drugmaker’s quarterly profit surpassed market estimates and its dividend payout was increased.
“People were really pessimistic coming into earnings season – overweight in cash and commodities, panic selling out of bonds and technology,” said Thomas Hayes, chairman of New York-based Great Hill Capital.
“However, the guidance is not coming down as quickly as expected. We’ll see more of it throughout this earnings season, especially in the IT sector, which everyone is negative about heading into earnings season.”
According to Refintiv data, 79.6% of the 49 businesses in the S&P 500 index that has reported quarterly earnings so far have surpassed profit projections. 66 percent of the time, estimates are exceeded.
Netflix Inc (NFLX.O) and International Business Machines Corp (IBM.N), both of which are expected to report after the close, gained 3.7 percent and 1.6 percent, respectively.
President of the Federal Reserve Bank of St. Louis, James Bullard, reiterated his call for raising interest rates to 3.5 percent by the end of the year to slow the country’s 40-year-high inflation. He also stated that a rate hike of 75 basis points was not out of the question. find out more
Stocks appeared to ignore the remarks, while bonds plummeted, sending the 30-year yield near 3% for the first time since April 2019, as investors braced for a year of a quicker interest rate hike