US 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
was up 416 points, or 1.3%, at 31,489. -
The S&P 500 SPX
jumped 58 points, or 1.5%, to 3,889. -
The Nasdaq Composite COMP
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 dampening 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 the coming months.”
Concerns about economic growth are reflected in the US bond market, too. As the Federal Reserve has tightened monetary policy, investors have pushed 2-year yields BX:TMUBMUSD02Y
above 10-year yields BX:TMUBMUSD10Y,
an inversion of the yield curve that is deemed a harbinger of potential recession.
The Apple news on Monday highlighted a disturbing 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
GOOGLE,
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 that 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 US housing starts fell 2% in June, while building permits were down 0.6%.
Companies in focus
-
Shares of Johnson & Johnson
JNJ
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
on Tuesday reported second-quarter results that missed analysts’ profit and sales estimates. Shares fell 0.3%. -
Shares of Arista Networks Inc.
ANET
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
-
US crude futures CL
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
fell 0.8%. -
Bitcoin BTCUSD
fell 0.5% to trade near $22,200. -
Asia markets were mixed following Wall Street’s overnight reversal. Hong Kong’s Hang Seng HK:HSI
fell 0.9% and the Shanghai Composite CN:SHCOMP
was flat. Japan returned from a day off to play catch-up, the Nikkei 225 JP:NIK
adding 0.7%. In Europe, the Stoxx 600 XX:SXXP
rose 1.2% and London’s FTSE 100 UK:UKX
gained 1%.
.