Tech Stocks Gain, With Nasdaq Climbing 1.6%

Technology and other growth stocks climbed Wednesday as more corporate earnings reports rolled in that were better than investors feared.

The Nasdaq Composite advanced 184.50 points, or 1.6%, to finish the day at 11897.65. The S&P 500 rose 23.21 points, or 0.6%, to 3959.90. The Dow Jones Industrial Average added 47.79 points, or 0.2%, to 31874.84. All three indexes rose for the second consecutive session and are trading at their highest levels since early June. Technology, communications, and consumer discretionary stocks rallied as investors sought out riskier areas of the market. For much of the year, rising interest rates have weighed on the value of stocks that are more focused on growth rather than near-term cash flows. Some of that pressure has eased over the past month. 

“We have a far less volatile 10-year U.S. Treasury yield, inflation expectations have come down, and earnings season, so far, has been better than feared,” said Art Hogan, chief market strategist at B. Riley FBR Inc. “Technology and consumer services have been some of the most beaten-down segments of the market. Now risk appetite is coming into those areas.”

Stocks have swung in recent days during an earnings season that has been scrutinized for signs about how the highest inflation in more than four decades and slowing economic growth are affecting companies. Recent results from companies such as Goldman Sachs and Citigroup came in above Wall Street’s expectations, even though both banks reported substantial declines in profit. 

Netflix followed suit late Tuesday, saying it lost fewer subscribers last quarter than it had expected and forecast it would add 1 million net new subscribers in the current period. Its shares rose $14.81, or 7.4%, to $216.44 and are up 14% this week, on pace for their best weekly performance since July 2020.

“Earnings have been supportive of the narrative that growth isn’t falling off a cliff,” said Fahad Kamal, chief investment officer at Kleinwort Hambros. “It doesn’t necessarily look like a recession is coming. But companies have been cautious with their guidance.”

Tesla, which reported after the market close, posted its first sequential decline in quarterly profit in more than a year as it recovers from an extended shutdown at its Shanghai assembly plant. The electric-vehicle maker also said it has sold 75% of the bitcoin it had purchased, a little more than a year after investing in the digital currency. Shares were little changed after hours.

Among other notable earnings reports, marketing house Omnicom rose $2.65, or 3.9%, to $70.06 after it posted revenue that beat analysts’ expectations and raised its guidance.

Oil-services firm Baker Hughes fell $2.33, or 8.3%, to $25.89 after its chief executive said he sees demand deteriorating over the next 18 months.

Source By: The wall street journal



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