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U.S. stocks rose Tuesday as investors assessed mixed earnings reports amid fears of an economic downturn, shaking off reports of slowing spending at Apple Inc. that weighed on equities in the previous session.
How are stock-index futures trading
-
The Dow Jones Industrial Average
DJIA,
+1.65%
was up 416 points, or 1.3%, at 31,489. -
The S&P 500
SPX,
+1.92%
jumped 58 points, or 1.5%, to 3,889. -
The Nasdaq Composite
COMP,
+2.14%
rose 165 points, or 1.5%, to 11,525.
On Monday, the Dow Jones Industrial Average fell 216 points, or 0.7%, erasing an earlier gain of more than 350 points. The S&P 500 and Nasdaq Composite each fell 0.8%. The S&P 500 has fallen six of the last seven sessions and has shed 19.6% year-to-date.
What’s driving markets
The tone turned more positive Tuesday amid mixed corporate earnings reports after a report Monday suggested Apple
AAPL,
was slowing hiring and spending which revived concerns that higher borrowing costs and rampant inflation were damping corporate confidence.
Analysts said deepening pessimism among investors could serve as a contrarian signal, setting the stage for some near-term upside. A closely watched monthly survey by Bank of America showed global fund managers at their most pessimistic since 2008.
“Stocks have been beaten down. That doesn’t mean we won’t see more downside for some stock markets around the world, especially given that earnings expectations are likely to be adjusted downward,” said Kristina Hooper, chief global market strategist at Invesco, in a note. “But I believe we are far closer to the bottom than the top — and meaningful positive catalysts could present themselves in coming months.”
Concerns about economic growth are reflected in the U.S. bond market, too. As the Federal Reserve has tightened monetary policy, investors have pushed 2-year yields
TMUBMUSD02Y,
above 10-year yields
TMUBMUSD10Y,
an inversion of the yield curve that is deemed a harbinger of potential recession.
The Apple news on Monday highlighted a dispiriting trend, noted Ipek Ozkardeskaya, senior analyst at Swissquote Bank. “Elon Musk recently announced he would cut 10% of jobs in Tesla
TSLA,
because he has a bad feeling about the economy. Alphabet
GOOG,
GOOGL,
Amazon
AMZN,
Meta
META,
Snap
SNAP,
and even Goldman
GS,
announced they would need less people to work for them as businesses would slow.”
The S&P 500 index on Monday remained below its 50-day moving average for the 60th consecutive day. That’s its longest such run since 2008 and suggests that investors should be cautious in chasing bear-market bounces, said technical analyst Jonathan Krinsky of BTIG.
Underpinning sentiment, however, and helping deliver gains on Tuesday, is a mostly positive second-quarter earnings reporting season, where 57% of those companies to have reported so far have beaten earnings per share and revenue expectations, according to S&P Global Market Intelligence.
IBM
IBM,
results were not well-received, however. The tech company beat expectations, but worries about how a strong dollar may impact future earnings pushed the stock lower by 6.8% Investors continued to monitor earnings, with results from streaming giant Netflix Inc.
NFLX,
due after the closing bell.
Read: Netflix is pulling out all the stops to reverse a slide in subscribers
Data showed U.S. housing starts fell 2% in June, while building permits were down 0.6%.
Companies in focus
-
Shares of Johnson & Johnson
JNJ,
+0.22%
rose 0.5% after the pharmaceutical and consumer health products company reported second-quarter profit and sales that beat expectations, offsetting a reduced full-year earnings outlook. -
Aerospace and defense contractor Lockheed Martin Corp.
LMT,
-0.15%
on Tuesday reported second-quarter results that missed analysts’ profit and sales estimates. Shares fell 0.3%. -
Shares of Arista Networks Inc.
ANET,
+3.59%
rose 2.2% after a Needham analyst upgraded the stock to buy from hold Tuesday, citing the company’s comparatively low international exposure and strong financial position.
How are other assets faring
-
U.S. crude futures
CL.1,
-0.33%
fell 0.4% to trade near $99 a barrel, losing early gains that came after news that Russia’s Gazprom had claimed force majeure on some buyers highlighted tensions in the energy space. -
The ICE Dollar index
DXY,
-0.79%
fell 0.8%. -
Bitcoin
BTCUSD,
+5.53%
fell 0.5% to trade near $22,200. -
Asia markets were mixed following Wall Street’s overnight reversal. Hong Kong’s Hang Seng
HSI,
-0.89%
fell 0.9% and the Shanghai Composite
SHCOMP,
+0.04%
was flat. Japan returned from a day off to play catch-up, the Nikkei 225
NIK,
+0.65%
adding 0.7%. In Europe, the Stoxx 600
SXXP,
+1.34%
rose 1.2% and London’s FTSE 100
UKX,
+1.01%
gained 1%.
