Wall Street rises on earnings boost

Shreyashi Sanyal and Bansari Mayur KamdarReuters
All of the 11 major S&P 500 sector indexes were higher, with battered technology stocks rising 0.9 per cent.
Camera IconAll of the 11 major S&P 500 sector indexes were higher, with battered technology stocks rising 0.9 per cent. Credit: Tumisu/Pixabay (user Tumisu)

US stock indexes have risen after upbeat results from a host of companies partially offset a wobbly start to the fourth-quarter reporting season while big tech stocks also made a comeback after a bruising sell-off.

Quarterly reports from UnitedHealth Group Inc and Procter & Gamble Co supported sentiment in early trading while Bank of America Corp and Morgan Stanley wrapped up earnings from big lenders on a positive note.

“Stocks were getting hit last quarter even though they beat estimates, which tells me that their prices were inflated,” said Joe Saluzzi, co-manager of trading at Themis Trading in New Jersey.

“Now that we’ve seen a bit of a sell off, when a company reports better than expected earnings, they should get a price rise as opposed to last quarter.”

All of the 11 major S&P 500 sector indexes were higher, with battered technology stocks rising 0.9 per cent.

UnitedHealth rose 2.5 per cent after the health insurer beat market estimates for quarterly profit on strong demand in its health insurance business.

Procter & Gamble gained 3.8 per cent as it raised its annual sales forecast, benefiting from resurgent demand for cleaning products due to a spike in COVID-19 infections.

Bank of America added 2.5 per cent on reporting a jump in fourth-quarter profit while Morgan Stanley rose 2.7 per cent after posting quarterly earnings above market expectations.

Most other big banks including JPMorgan Chase & Co, Citigroup and Goldman Sachs Group Inc reported disappointing results, knocking down the S&P 500 financial sector and banks subsector from record highs.

Earnings from S&P 500 companies are expected to grow 23.1 per cent year-over-year in the fourth quarter, according to IBES estimates from Refinitiv.

The Nasdaq index came a hair’s breadth away from confirming a 10 per cent correction at the close on Tuesday, having lost 9.7 per cent from its November 19 record closing high.

The tech-heavy index also closed below its 200-day moving average, a key technical support level, for the first time in almost two years as the tech-heavy index has been pressured by a jump in benchmark US Treasury yields.

Megacap growth companies including Microsoft Corp, Alphabet Inc, Tesla Inc, Meta Platforms Inc and Netflix Inc, rose up to 2.0 per cent.

Investors are now waiting for next week’s Federal Reserve policy meeting for more cues on the central bank’s plan to control inflation.

Data last week showed US consumer prices increased strongly in December, adding up to the largest annual rise in inflation in nearly four decades.

In early trading, the Dow Jones Industrial Average was up 138.44 points, or 0.39 per cent, at 35,506.91, the S&P 500 was up 27.93 points, or 0.61 per cent, at 4,605.04 and the Nasdaq Composite was up 101.78 points, or 0.70 per cent, at 14,608.68.

Cisco Systems Inc fell 1.6 per cent after Goldman Sachs downgraded the network equipment maker’s stock to “neutral” from “buy”.

United Airlines fell 0.6 per cent ahead of its fourth-quarter results after markets close.

Advancing issues outnumbered decliners by a 2.39-to-1 ratio on the NYSE and by a 2.04-to-1 ratio on the Nasdaq.

The S&P index recorded four new 52-week highs and two new lows while the Nasdaq recorded 16 new highs and 140 new lows.

Get the latest news from thewest.com.au in your inbox.

Sign up for our emails