Earnings report comes as shares rise on Wall Street

Stocks are rising in afternoon trading on Wall Street Tuesday as traders take a heavy round of earnings reports from large US companies.

The S&P 500 rose 62 points, or 1.6%, to 3,859. The Dow Jones Industrial Average rose 337 points, or 1.1%, to 31,836 and the Nasdaq rose 2.3%. Small company shares outperformed the broader market. The Russell 2000 jumped 2.7%.

Investors are focusing on the latest round of earnings reports from some large companies, which are especially important as shareholders look for signs of the impact of inflation on various industries. Prices for everything from clothing to food remain at their highest level in four decades, putting pressure on companies to raise prices and cut costs, while squeezing consumers.

“Earnings may not be as dire as feared, but the numbers still aren’t great,” said Adam Crisafuli of Vital Knowledge in a Tuesday research note.

General Motors rose 3.6% after delivering solid results. Paint maker Sherwin-Williams jumped 3.5% after reporting solid financial results.

Bond yields have dropped significantly. The yield on the 10-year Treasury, which affects mortgage rates, fell to 4.10% from 4.23% late Monday. The yield on the two-year Treasury tracking the Federal Reserve’s action fell from 4.50% to 4.45% late Monday.

US crude oil prices rose 0.9%.

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upcoming income report

Several other big names are on deck to report earnings for the week. Google’s parent company reports its results later Tuesday, along with Microsoft and Visa. The parent company of Boeing, Ford and Facebook will report its results on Wednesday. Caterpillar, Apple and Amazon are among the big companies delivering results on Thursday.

Packaging maker Crown Holdings’ latest earnings fell 17.3% after falling short of estimates. Industrial conglomerate General Electric fell 0.6% after reporting weak third-quarter earnings.

In addition to earnings, barbecue grill maker Weber said it rose 29.7% after BDT Capital Partners was interested in buying the rest of the company. Adidas fell 2.3% after the German sportswear company ended its partnership with the rapper, formerly known as Kanye West, over his offensive and anti-remarks.

Consumer prices climb 8.2% as Federal Reserve weighs decision to hike interest rates


Fed-fueled recession fears mount

The Federal Reserve and central banks around the world are raising interest rates to control inflation. This has worried investors that the central bank is going too far in trying to slow the economy and instead causing a recession.

The Fed is expected to raise interest rates by another three-quarters of a percentage point at its upcoming meeting in November. Markets are looking for any indication that the central bank is ready to ease rate hikes. This includes data that the economy is slowing.

A measure of home prices released on Tuesday showed that the housing market continues to cool. The S&P CoreLogic Case-Shiller Index, which tracks prices in major cities, fell more than expected in August. The Fed’s aggressive interest rate hikes have made borrowing more expensive, in turn pushing mortgage rates higher and shrinking the broader housing market.

According to Oxford Economics, home prices could fall sharply this year, with a 10% decline in the fourth quarter.

“We expect the decline in home prices to accelerate as higher mortgage rates deal a major blow to affordability and home sales,” prominent US economist Nancy Vanden Houten said in a Tuesday research note.

The US economy is already slowing and actually contracted during the first half of the year. The government will release its third quarter GDP report on Thursday.

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