Wall Street extends rally, driven by technical bounce

  • Baker Hughes misses Q4 profit estimates
  • Venture capital investor Elliott Management is taking a stake in Salesforce
  • The chips are up on Barclay’s upgrade
  • Indexes: Dow 0.76%, S&P 1.19%, Nasdaq 2.01%

NEW YORK, Jan 23 (Reuters) – Wall Street rose sharply on Monday as technology stocks rallied as investors kicked off an earnings-heavy week with renewed enthusiasm for the market-leading fast-moving stocks that crashed last year.

All three major stock indexes extended Friday’s gains, led by the tech-heavy Nasdaq, lifted by semiconductor stocks. (.SOX).

“(Chips are) a depressed group, so I’m not surprised,” said Peter Tuss, president of Chase Investment Advisors in Charlottesville, Virginia. “We’re going to see the earnings of these companies in the next couple of weeks, and that’s where the rubber meets the road.”

“This is a group ripe for a comeback.”

The session represented the calm before the storm in a week loaded with high-profile earnings reports and the back-end loaded with important economic data.

Investors are confident that the Federal Reserve will implement an interest rate hike next week, even as the U.S. central bank remains determined to contain the highest inflation cycle in decades.

“(Investors) are very comfortable that they’re going to see less rate hikes from the central bank, we’re rounding the corner on inflation and interest rate hikes,” Tuz added. “Equities can do well in that environment, especially the large growth stocks that drive the market.”

According to CME’s FedWatch tool, financial markets are pricing in a 99.9% probability of a 25 basis point increase in the Fed funds target rate at the end of its two-day monetary policy meeting.

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Dow Jones Industrial Average (.DJI) The S&P 500 rose 254.07 points, or 0.76%, to 33,629.56. (.SPX) The Nasdaq Composite rose 47.2 points, or 1.19%, to 4,019.81. (.IXIC) It added 223.98 points or 2.01% to 11,364.41.

Of the 11 major S&P 500 sectors, all but energy (.SPNY) Finished in green with tech stocks (.SPLRCT) Up 2.3% on the session, enjoying the largest percentage gain.

The fourth-quarter reporting season has shifted into overdrive, with 57 companies in the S&P 500 reporting results. 63% of them delivered better-than-expected returns, according to Refinitiv.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, USA on December 7, 2022. REUTERS/Brendan McDermid

Analysts now expect S&P 500 fourth-quarter earnings, as a whole, to fall 3% year-over-year, more than double the 1.6% annual decline seen earlier in the year for Refinitiv.

This week, Microsoft Corp (MSFT.O) and Tesla Inc., along with several other heavy industries, including Boeing CO (BA.N)3M Co (MMM.N)Union Pacific Corp (UNP.N)Dow Inc (below)and Northrop Grumman Corp (NOC.N)Quarterly results are expected to be released.

Philadelphia SE Semiconductor Index (.SOX) After Barclays upgraded the sector to “overweight” from “equal weight,” it rose 5.0%, its biggest one-day gain since Nov. 30.

Tesla rose 7.7% after Chief Executive Elon Musk tweeted that he supports taking the electric automaker private amid a fraud investigation.

Baker Hughes Co (PKRO) Quarterly profit missed estimates due to inflationary pressures and ongoing disruptions due to Russia’s war on Ukraine. Shares of the oilfield services company fell 1.5%.

Cloud-based software company Salesforce Inc (CRM.N) It rose 3.1% following news that activist investor Elliott Management Corp had taken a multibillion-dollar stake in the company.

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Spotify Technology SA (SPOT.N) It joined a growing list of tech-related companies to announce upcoming job cuts, shedding 6% of its workforce as interest rates rise and the possibility of a recession continues to weigh on growth stocks. Shares of the music streaming company rose 2.1%.

On the economic front, the US Commerce Department is expected to release its initial “advance” estimate of fourth-quarter gross domestic product on Thursday, which analysts expect will be 2.5%.

On Friday, the broad-based Personal Consumption Expenditure (PCE) report is due to shed light on consumer spending, income growth and, most importantly, inflation.

Advancing issues outnumber declining issues on the NYSE by a ratio of 2.77-to-1; On the Nasdaq, the ratio was 1.73-to-1 in favor of the advancers.

The S&P 500 posted 11 new 52-week highs and no new lows; The Nasdaq Composite posted 82 new highs and 19 new lows.

Volume in US equities was 11.99 billion shares, compared to an average of 10.62 billion over the past 20 trading days.

Reporting by Stephen Culp; Additional reporting by Sreyashi Sanyal and Johan M Cherian in Bengaluru Editing by Marguerite Choi

Our Standards: Thomson Reuters Trust Principles.

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