NEW YORK CITY, RAW – US stock indexes have risen on strong earnings reports while bargain hunting boosted mega-cap growth companies after the Nasdaq index plunged into correction territory in the previous session.
The Nasdaq has had a rough two months since hitting a record peak in November, with investors dumping tech stocks on expectations that the Federal Reserve would aggressively raise interest rates to tame inflation.
Recovering somewhat from Wednesday’s sell-off, companies including Microsoft Corp, Alphabet Inc, Amazon, Tesla Inc, Meta Platforms Inc rose up to 2.5 per cent.
The S&P 500 consumer discretionary, technology and communication services were the sectors that gained the most on the benchmark index.
“We’ve done a lot of damage in a very short period of time and that tends to cause a reflexive bounce. It won’t take much for bargain hunters to come out and turn this thing around a little bit,” said Art Hogan, chief market strategist at National Securities in New York.
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Netflix, which is set to kick off the earnings for big growth companies after market close, rose 1.4 per cent.
Wall Street is watching Netflix’s results to see whether companies have started to pull in enough new customers to justify big spending on online programming in 2022.
The Fed’s policy meeting next week will be eyed for clarity on the central bank’s plan to control inflation after data earlier this month showed US consumer prices surged to the highest level in four decades in December.
Data on Thursday showed the number of people in the US filing new claims for unemployment benefits unexpectedly rose last week, likely as a wave of COVID-19 cases disrupted business activity.
In early trading, the Dow Jones Industrial Average was up 207.11 points, or 0.59 per cent, at 35,235.76, the S&P 500 was up 33.65 points, or 0.74 per cent, at 4,566.41 and the Nasdaq Composite was up 194.08 points, or 1.35 per cent, at 14,534.33.
Insurance industry bellwether Travelers Companies gained 3.7 per cent after reporting a record quarterly profit as higher returns from its investments cushioned the hit from a rise in catastrophe-related claims.
“The earnings season is going to be a positive catalyst, especially since we’re coming in so significantly off the all-time highs. The setup for earnings surprises is likely also a set up for markets to actually do a whole lot better,” National Securities’ Hogan said.
Baker Hughes Co jumped 5.1 per cent as surging crude prices boosted demand for its oilfield service equipment, helping it post an adjusted quarterly profit compared with a year-ago loss.
American Airlines fell 1.9 per cent, reversing early gains even as it reported a smaller fourth-quarter loss, while United Airlines shed 1.2 per cent after cutting its capacity forecast for 2022.
Advancing issues outnumbered decliners by a 1.82-to-1 ratio on the NYSE and a 2.43-to-1 ratio on the Nasdaq.
The S&P index recorded four new 52-week highs and one new low while the Nasdaq recorded seven new highs and 60 new lows.