Frankfort, New York Stronger-than-expected corporate balance sheets and hopes of less sharp Fed rate hikes lifted sentiment on Wall Street. The leading index Dow Jones gained 1.1 percent on Tuesday to 31,836 points. The tech-heavy Nasdaq advanced 2.3 percent to 11,199 points, and the broad S&P 500 was up 1.6 percent to 3,859 points.
“Investors are becoming more confident that inflation will moderate as consumers reconsider their bulk buying,” said Edward Moya, a senior market analyst at Oanda. “Expectations for a rate hike by the Fed will remain volatile, but expectations are growing that a weaker economy will cause the Fed to pause in tightening policy after the February meeting.”
Analysts also expect the ECB to hike interest rates by a jumbo 75 basis points on Thursday, although many economists now believe the euro zone has entered a recession. Data on Tuesday showed that German business confidence improved in October, although it remains at depressed levels as Europe’s largest economy heads for a difficult winter.
US house prices in August and consumer sentiment in October fell more than expected. “After hopes of a reversal of interest rate hikes revived last Friday, bad news is good news for the markets again,” said analyst Konstantin Oldenburger from broker CMC Markets. The currently published weaker, but not too weak economic data thus played into the hands of investors.
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US consumer sentiment clouded over more in October than expected. The barometer for consumer sentiment fell to 102.5 points from a revised 107.8 points in September, the institute’s Conference Board said in its survey on Tuesday. Economists had only expected a drop to 106.5 points.
Yields on the 10-year US government bond fell to 4.075 percent as fears of interest rate hikes receded. Technology stocks were accordingly on the upswing. Apple’s shares rose 1.9 percent, and graphics card manufacturer Nvidia rose 5.2 percent. According to experts, rising inflation and higher interest rates will devalue the future profits of these high-growth companies.
The pound was firmer around the handover of UK Prime Minister-elect Rishi Sunak. It rose 1.8 percent to $1.1473. On the other hand, the dollar index, which reflects the exchange rate for major currencies, fell by one percent to 110.87 points.
Chinese stocks staged a modest recovery after Monday’s historic sell-off. President Xi Jinping’s rise to power has raised fears that concentrated decision-making could weaken growth and destabilize the geopolitical situation.
“We’re staying away from the Chinese market right now because the political scene isn’t favorable,” Laila Pence, president of Pence Wealth Management, said in an interview with Bloomberg TV. “In the US, there’s a lot less risk and just as much potential.”
Stock market expert Koch: “The US quarterly figures are better than expected”
Look at the individual values
Tech: Microsoft and Google parent Alphabet each gained more than one percent before their expected post-market close. There is a positive attitude towards technology company profits, said Giuseppe Sette, head of research house Toggle. “In a way, their ability to weather an inflationary cycle is strong – especially because the technology industry has always been very flexible in its pricing.” PayPal was also in demand, up 7.1 percent. Amazon wants to use a payment processor platform in the future.
General Electric: At the same time, investors turned their backs on General Electric after a slump in profits. The titles of the US industrial group fell 0.5 percent. Those of the armaments group Raytheon fell by 1.5 percent after a reduction in the forecast.
Coke: Soaring prices for sugary sodas have not deterred Coca-Cola customers. The titles increased by 2.4 percent after the quarterly figures were more robust than expected. General Motors impressed with a surprisingly high quarterly profit. The title of the largest US automaker increased by 3.6 percent.
JetBlue: The airline reported a quarterly profit as increased demand for travel helped offset rising costs. However, the result fell short of estimates, and earnings were only in line with consensus. The shares fell by around four percent.
xerox: The shares of the office equipment manufacturer fell by almost 16 percent at times. The company had reported adjusted quarterly earnings of 19 cents a share versus the consensus estimate of 40 cents. Xerox has been weighed down by rising costs and supply chain constraints.
3M: The conglomerate reported better-than-expected third-quarter earnings, but the conglomerate’s revenue fell short of guidance. The company lowered its full-year guidance due to rising costs and the impact of the strong US dollar. The stock fell 0.8 percent.
Qualtrics: The stock climbed about 10 percent. The maker of customer feedback software reported better-than-expected quarterly results and raised its full-year guidance.
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