U.S. stocks traded higher early Wednesday, with investors sizing up a mixed batch of results from Boeing Co., Microsoft Corp. and Alphabet Inc. among others, as the Nasdaq Composite bounced following its lowest finish in more than two years.
How are stock-index futures trading?
- The Dow Jones Industrial Average DJIA, +0.83% rose 300 points, or 0.9%, to 33,540.
- The S&P 500 SPX, +0.89% jumped 46 points, or 1.1%, to 4,221.
- The Nasdaq Composite COMP, +0.73% advanced 185 points, or 1.5%, to trade at 12,673.
On Tuesday, the Dow industrials tumbled more than 800 points, or 2.4%. The S&P 500 fell 2.8%, while the Nasdaq Composite slid 4%, booking its largest daily percentage drop since Sept. 8, 2020 and its lowest close since Dec. 14, 2020, according to Dow Jones Market Data.
What’s driving markets?
Investors are juggling several concerns at once, including fears the Federal Reserve could knock the economy into recession as it raises interest rates to battle high inflation, along with worries about China’s COVID outbreak which is slowing economic growth and a mixed U.S. corporate earnings reporting season.
Investors were also keeping watch on tensions surrounding the war in Ukraine, with signs of escalation after Russia’s Gazprom said Wednesday that it is halting gas deliveries to Bulgaria and Poland due to a failure by those countries to pay in rubles. European gas prices saw a 10% jump.
Analysts questioned whether any near-term equity bounce would have staying power.
“You get the feeling that today’s rebound is just driven by bargain hunting and short-covering more than anything,” said Fawad Razaqzada, market analyst at City Index and Forex.com, in a note.
“When you consider the fact that there is an energy crisis in Europe, with Russia’s decision to suspend gas supplies to Poland and Bulgaria potentially triggering an energy war, China’s determination to beat COVID outbreaks with lockdowns, and — above all — a Federal Reserve pursing an aggressive monetary tightening policy, investors find it difficult to buy and hold stocks for the long term, without first seeing a major correction,” he wrote.
Microsoft MSFT, +6.01% shares rose 5% after the tech giant late Tuesday reported profit and sales estimates that beat forecasts.
But Google parent Alphabet GOOGL, -3.24% reported sales and earnings that came in short of estimates, and shares fell 3.2%.
Another big decliner was Boeing BA, -7.12%, with shares of the aerospace and defence giant dropping toward a 17-month low after much wider-than-expected loss and a big revenue miss.
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“Either way, tech and high beta areas of the equity market need to find some inspiration, or a further liquidation can’t be ruled out — at the moment it feels like catching a falling knife,” said Chris Weston, head of research at Pepperstone, in a note to clients.”
“Again, we ask what will [be] the circuit breaker to promote a lasting trend higher. My own view is it either comes from a belief that China has COVID under control or we hear a Fed member saying ‘inflation is a concern but we’re watching for signs that growth concerns or financial conditions overtighten,’” said Weston. Investors won’t hear from Federal Reserve officials after the next Fed meeting on May 4.
Facebook parent Meta FB, -1.67% will be the next big tech company to report, with those results expected after the market close Wednesday, alongside Qualcomm QCOM, +2.19%, PayPal PYPL, -0.05% and Ford Motor F, +1.33%.
The U.S. trade deficit in goods jumped 17.8% in March to a record $ 125.3 billion, government data showed. A home-price index is due later Wednesday morning.
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What companies are in focus?
- General Motors Co. GM, +1.89% shares rose 2% after the automaker reported disappointing first-quarter revenue, but gave upbeat guidance.
- Stock in Texas Instruments Inc. TXN, -0.11% fell 2.3% after the chip maker gave a cautious outlook over COVID-19 restrictions in China affecting manufacturing for its customers.
- Robinhood Markets Inc. HOOD, -5.40% fell more than 2%. The online-trading platform’s chief executive, Vlad Tenev, announced a 9% cut in the company’s work force.
- Mattel Inc. MAT, +10.85% shares surged 10.9% after The Wall Street Journal reported the toy maker has held informal talks with private-equity firms Apollo Global Management and L Catterton about being purchased.
How are other assets trading?
- The yield on the 10-year Treasury note TMUBMUSD10Y, 2.786% fell 3.2 basis points to 2.741%. Yields and debt prices move opposite each other.
- Oil futures gave up early gains, with the U.S. benchmark CL.1, -0.96% down 1.6% to trade just above $ 100 a barrel.
- The ICE U.S. Dollar Index DXY, +0.64%, a measure of the currency against a basket of six major rivals, was up 0.7%, hitting its highest since March 2020.
- Bitcoin BTCUSD, +2.44% rose 3% to trade near $ 39,300.
- Gold for June delivery GC00, -0.86% GCM22, -0.86% fell below $ 1,900 an ounce to trade at a two-month low..
- In European equities, the Stoxx Europe 600 SXXP, +0.73% rose 0.7% and London’s FTSE 100 UKX, +0.53% gained 0.4%.
- In Asia, the Shanghai Composite SHCOMP, +2.49% rose 2.4%, while the Hang Seng Index HSI, +0.06% finished flat in Hong Kong and Japan’s Nikkei 225 NIK, -1.17% fell 1.1%.