US equities rose the most since January, while Treasuries retreated, after solid earnings from technology companies blotted out the impact of a report showing slowing economic growth and higher-than-forecast inflation.
(Bloomberg) — US equities rose the most since January, while Treasuries retreated, after solid earnings from technology companies blotted out the impact of a report showing slowing economic growth and higher-than-forecast inflation.
The S&P 500 jumped 2.0% and the tech-heavy Nasdaq 100 rose 2.8% as a surge in advertising revenue helped Meta Platforms Inc. beat analyst estimates for profit, pushing the company’s shares 10% higher. Amazon.com Inc. and Intel Corp. were also higher in postmarket trading after releasing results.
“Coming into this week, the biggest concern investors had was that any or all of the mega-cap tech were likely to disappoint — the setup was difficult because they had all run up into earnings,” Art Hogan, chief market strategist at B. Riley Wealth Management, said in an interview. “Yet there’s a ubiquitous feeling large-cap tech did a great job managing their businesses — it’s a sigh of relief the market is breathing,”
Hasbro Inc. was the latest consumer company to top earnings estimates after the likes of Coca-Cola Co. and Procter & Gamble Co. That boosted confidence corporate America is coping relatively well with price pressures and policy tightening. Hasbro shares jumped 15%.
Treasuries fell, with the policy-sensitive two-year yield trading at 4.08%, as the unexpectedly high inflation data could prompt the Federal Reserve to keep interest rates higher for longer. The US central bank is expected to raise rates by a quarter percentage point at its meeting next week.
“We are seeing heavier reactions in tech as firms are beginning to bear the fruit of earlier cost efficiencies,” Lewis Grant, senior portfolio manager for global equities at Federated Hermes, wrote in a note to clients. “Investor sentiment remains every bit as fragile as the global economy and earnings season provides much needed visibility on the general health of firms.”
Dana Peterson, chief economist at The Conference Board, said the latest batch of economic data — including a slowdown in US jobless claims — showed the kind of cognitive dissonance investors have been grappling with as “typically when you have recessions, the labor market collapses with GDP, and we’re not seeing that.”
“We’re probably going to dip into a recession, maybe starting right now in the second quarter, but we really need to see data,” she said. “Our leading indicators index suggests that it’s starting to happen now, and consumers and CEOs have been anticipating recession for some time.”
In Europe, the Stoxx 600 Index was little changed after earlier fluctuations. Sanofi’s profit topped estimates while Deutsche Bank AG dropped after trading revenue disappointed.
Elsewhere, oil fluctuated after a Wednesday fall. The dollar was little changed. And Bitcoin resumed an advance.
Stocks
- The S&P 500 rose 2% as of 4:01 p.m. New York time
- The Nasdaq 100 rose 2.8%
- The Dow Jones Industrial Average rose 1.6%
- The MSCI World index fell 0.3%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.2% to $1.1024
- The British pound rose 0.2% to $1.2491
- The Japanese yen fell 0.2% to 133.90 per dollar
Cryptocurrencies
- Bitcoin rose 4.4% to $29,661.75
- Ether rose 3% to $1,923.57
Bonds
- The yield on 10-year Treasuries advanced seven basis points to 3.52%
- Germany’s 10-year yield advanced six basis points to 2.46%
- Britain’s 10-year yield advanced six basis points to 3.79%
Commodities
- West Texas Intermediate crude rose 0.7% to $74.85 a barrel
- Gold futures were little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Emily Graffeo, Peyton Forte, Cecile Gutscher, Richard Henderson, Anchalee Worrachate and Edward Bolingbroke.
(A previous verison corrected the yield on the two-year Treasury)
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