January 28, 2023

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Wall Street extended its rally supported by the technical rebound

  • Baker Hughes falls due to lack of fourth-quarter earnings estimates
  • Activist investor Elliott Management is involved with Salesforce
  • Chips go up when Barkley is promoted
  • Indices rose: Dow 0.76%, Standard & Poor’s 1.19%, Nasdaq 2.01%

NEW YORK (Reuters) – Wall Street closed sharply higher on Monday, boosted by a rally in technology stocks, as investors kicked off a profitable week with renewed enthusiasm for market-leading momentum stocks battered last year.

All three major stock indices extended gains on Friday, with the high-tech Nasdaq leading the pack, supported by semiconductor stocks. (.SOX).

“(The chips are) a group that’s been depressed, so I’m not super surprised,” said Peter Tose, chairman of Chase Investments in Charlottesville, Virginia. “We’re going to see earnings from these companies over the next couple of weeks and that’s going to be where the rubber meets the road.”

“It’s a group that was ripe for a rebound.”

The session represented the calm before the storm in a week filled with notable earnings reports and a backstory loaded with important economic data.

Investors are certain the Federal Reserve will deliver an interest rate hike next week even as the US central bank remains committed to taming the hottest inflationary cycle in decades.

“(Investors are) very relieved that they will see less rate hikes from the Fed, and that we’re rounding the corner on rising inflation and interest rates,” Tose added. “Stocks can do well in that environment, especially the high-growth stocks that are driving the market.”

Financial markets have priced in a 99.9% probability of a 25 basis point hike from the target rate for Federal Reserve funds at the close of the two-day monetary policy meeting next Wednesday, according to CME’s FedWatch tool.

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Dow Jones Industrial Average (.DJI) The Standard & Poor’s 500 Index rose 254.07 points, or 0.76%, to 33,629.56. (.SPX) rose 47.2 points, or 1.19%, to 4,019.81, and the Nasdaq Composite Index (nineteenth) It added 223.98 points, or 2.01%, to 11,364.41 points.

Of the 11 major S&P 500 sectors, all but energy (.SPNY) Finished in green, with technology stocks (.SPLRCT) It enjoyed the largest percentage gain, up 2.3% for the session.

Fourth-quarter reporting season has turned into overdrive, with 57 companies in the S&P 500 publishing their results. Of those, 63% generated better-than-expected earnings, according to Refinitiv.

Analysts now see the S&P 500’s fourth-quarter earnings falling, in aggregate, 3% year-over-year, which is nearly double the 1.6% annual decline seen at the start of the year, according to Refinitiv.

This week, Microsoft Corp (MSFT.O) and Tesla Inc., along with a group of industrial behemoths including Boeing CO (prevention)3M Co., Ltd (MMM.N)Union Pacific Corp (UNP.N)Dow Corporation (lowest)and Northrop Grumman Corporation (NOC.N)is expected to publish quarterly results.

Philadelphia Semiconductor Index (.SOX) It jumped 5.0%, its biggest one-day gain since November 30 after Barclays raised the sector to “overweight” from “equal weight”.

Tesla stock rose 7.7% after CEO Elon Musk took a stand in the fraud trial related to a tweet in which he said he was in support of taking the electric car maker private.

Baker Hughes Corporation (BKR.O) It lagged quarterly earnings estimates due to inflationary pressures and ongoing turmoil over Russia’s war on Ukraine. The oilfield services company fell 1.5%.

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Cloud-based software company Salesforce Inc (CRM.N) It jumped 3.1% on news that activist investor Elliot Management Corp. has acquired several billion dollars in the company.

Spotify Technology SA (SPOT.N) It joined a growing list of technology-related companies to announce impending job cuts, shedding 6% of its workforce as higher interest rates and the prospect of a looming recession continue to pressure growth stocks. Shares of the music streaming company rose 2.1%.

On the economic front, the US Commerce Department is expected to unveil its initial “progress” on fourth-quarter gross domestic product on Thursday, which analysts expect to fall at 2.5%.

On Friday, the broad-based Personal Consumption Expenditure (PCE) report is set to highlight consumer spending, income growth, and crucially inflation.

Advance issues outnumbered declining issues on the NYSE by a ratio of 2.77 to 1; On Nasdaq, the ratio was 1.73 to 1 in favor of advanced traders.

The S&P 500 posted 11 new highs in 52 weeks and no new lows. The Nasdaq index posted 82 new highs and 19 new lows.

Trading volume on US stock exchanges reached 11.99 billion shares, compared to an average of 10.62 billion over the last 20 trading days.

Reporting by Stephen Kolb. Additional reporting by Shriyashi Sanyal and Yohan M Cherian in Bengaluru; Editing by Margarita Choi

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