Stocks Extend Rebound on Rising Earnings Optimism: Markets Wrap

Stocks Extend Rebound on Rising Earnings Optimism: Markets Wrap

(Bloomberg) -- Stocks continued their rebound from nearly oversold levels as traders took solace from a solid start to the corporate-earnings season even as central banks remain on hawkish footing.

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After almost giving up all of its gains, the S&P 500 notched back-to-back gains to start the week. Futures extended the advance in late trading after Neflix Inc. delivered a surge in subscribers. Its shares jumped more than 13% as of 4:40 p.m. in New York. The biggest ETF that tracks the Nasdaq 100 advanced more than 1%. United Airlines Holdings Inc. climbed 7% after reporting its results.

During the cash session, the S&P 500 rose 1.1% and is now up 3.8% in two days. Goldman Sachs Group Inc. climbed on solid results. Apple Inc. rebounded after briefly turning negative on a report it was cutting production of its iPhone 14 Plus.

"Earnings season offers investors the opportunity to focus more on the actual earnings power of corporate America, and less on the machinations of the backward-looking economic data stream," said Art Hogan, chief market strategist at B. Riley. "A better-than-feared earnings season may well be the catalyst the market needs to see a break in the steady grind lower."

Upbeat company results, cheaper valuations and UK policy reversals have helped buoy risk sentiment. The sentiment on stocks and global growth among fund managers surveyed by Bank of America Corp. shows full capitulation, opening the way for equities to bottom in the first half of 2023.

Still, with headwinds from inflation, risks to the economy and hawkish central banks continuing to confront investors, there's debate over how durable the gains will prove.

Read: Fed's Bostic Says Slowing Inflation Best for Long-Run Employment

Some regional Fed directors last month favored raising a key interest rate by a smaller or larger amount than the 75 basis points that policymakers ultimately decided was needed to curb persistent inflation, according to minutes of discount-rate meetings released Tuesday.

"There's still a strong feeling of a bear-market rally about trading over the course of the last week," said Craig Erlam, senior market analyst at Oanda Europe Ltd. "The economic landscape looks treacherous and we don't even know if we're at peak inflation and interest rate pricing yet. Those are substantial headwinds that will make any stock market rebound extremely challenging."

Key events this week:

  • Euro area CPI, Wednesday

  • EIA crude oil inventory report, Wednesday

  • US MBA mortgage applications, building permits, housing starts, Fed Beige Book, Wednesday

  • Fed's Neel Kashkari, Charles Evans, James Bullard speak, Wednesday

  • US existing home sales, initial jobless claims, Conference Board leading index, Thursday

  • Euro area consumer confidence, Friday

Some of the main moves in markets:

Stocks

  • The S&P 500 rose 1.2% as of 4 p.m. New York time

  • The Nasdaq 100 rose 0.8%

  • The Dow Jones Industrial Average rose 1.1%

  • The MSCI World index rose 1.1%

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro rose 0.2% to $0.9856

  • The British pound fell 0.3% to $1.1323

  • The Japanese yen fell 0.1% to 149.23 per dollar

Cryptocurrencies

  • Bitcoin fell 1.5% to $19,227.77

  • Ether fell 2.2% to $1,300.61

Bonds

  • The yield on 10-year Treasuries declined two basis points to 3.99%

  • Germany's 10-year yield advanced two basis points to 2.28%

  • Britain's 10-year yield declined three basis points to 3.95%

Commodities

  • West Texas Intermediate crude fell 2.6% to $83.24 a barrel

  • Gold futures fell 0.5% to $1,656.50 an ounce

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