NEW YORK CITY, RAW – Another seesaw session ended with the Wall Street benchmarks in positive territory and the energy index at a record high, although trading reflected investor uncertainty about how to play the current market.
Recent sessions have been choppy, as the prospect of an aggressive rate-hike campaign by the US Federal Reserve looms large and investors seek to position themselves accordingly – a task not made easy by lingering pandemic influences on the economy and geopolitical tension in Europe.
The S&P 500 and the Nasdaq logged their largest two-day gains since April 2020 on the final trading day of January, which still turned out to be their worst monthly performance since March 2020.
The first day of February saw both, as well as the Dow, trade in negative territory for part of the morning, in the wake of data from the Labor Department and the ISM’s purchasing managers’ index (PMI), although the trio gained in strength as the day progressed to end higher.
“You’re starting to see that there are a lot of investors who are concerned about valuations going forward, but there are others who are worried about growth, so it seems the wall of worry keeps on growing as the economy exits this pandemic,” said Ed Moya, senior market analyst at OANDA.
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Philadelphia Fed President Patrick Harker said on Tuesday it may be appropriate for the US central bank to raise rates four times this year, while Atlanta Fed president Raphael Bostic said the Fed needs to act “soon” to control inflation expectations.
Traders are betting on five rate hikes this year, with some Wall Street analysts expecting seven hikes.
“This will be the year when Fed will pull back support … the markets will not be on steroids anymore and may go through a phase of detox,” said Anu Gaggar, global investment strategist at Commonwealth Financial Network.
Geopolitical tensions added to market volatility, with Ukraine’s president signing a decree to boost his armed forces by 100,000 troops over three years, as European leaders lined up to back him in a standoff with Russia and the United States demanded immediate Russian de-escalation.
According to preliminary data, the S&P 500 gained 30.27 points, or 0.67 per cent, to end at 4,545.82 points, while the Nasdaq Composite gained 106.12 points, or 0.75 per cent, to 14,346.00. The Dow Jones Industrial Average rose 261.92 points, or 0.77 per cent, to 35,393.78.
Once again, energy led the major S&P sectors, closing at a record high. The index is, by far, the best performer in 2022, as US crude hovers near a seven-year high.
Those strong energy prices helped Exxon Mobil Corp to post its biggest quarterly profit in seven years on Tuesday, and its stock jumped as a result.
As of Tuesday, 184 S&P 500 companies posted quarterly results, of which 78.8 per cent reported earnings above analyst expectations, according to Refinitiv.
Google parent Alphabet Inc rose ahead of quarterly results due after the bell. Amazon Inc and Meta Platforms Inc are also on deck later this week.
Of those which reported earlier on Tuesday, United Parcel Service Inc jumped after projecting 2022 revenue above market expectations, and recruiter ManpowerGroup Inc gained.
AT&T Inc dropped after saying it will spin off WarnerMedia in a $US43 billion ($A61 billion) transaction to merge its media properties with Discovery Inc and also cut its dividend by nearly half.
