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Wall Street’s main indexes have risen for the third straight session, led by the Nasdaq, as a fall in US Treasury yields lifted megacap growth companies including Microsoft and Alphabet ahead of their earnings reports later in the day.
Shares of Microsoft and Google-owner Alphabet were up 0.6 per cent and 1.2 per cent respectively while Apple and Amazon.com also rose ahead of reporting quarterly earnings this week.
Earnings from the companies will offer a glimpse into how US corporations are holding up in the face of decades-high inflation and tighter financial conditions.
“There is a positive view (on technology earnings),” said Giuseppe Sette, president of AI investment platform Toggle.
“In a way, their ability to play through an inflationary cycle is strong, especially because tech has always had a very flexible ability to adjust prices.”
The tech-heavy Nasdaq jumped against a drop in the 10-year Treasury yield which touched a session low of 4.06 per cent from 4.23 per cent on Monday.
The earnings season has been better than expected, with nearly three quarters of the 129 companies in the S&P 500 having beaten estimates, according to Refinitiv data.
Among Dow components, Coca-Cola Co rose 0.7 per cent after the company raised its annual revenue and profit forecasts, banking on steady demand amid price increases.
But 3M fell 0.8 per cent as it cut its full-year revenue and profit forecasts due to a stronger US dollar.
Meanwhile, General Motors added 2.8 per cent after reaffirming its full-year outlook.
Raytheon Technologies Corp fell 2.1 per cent after the aerospace supplier trimmed its 2022 sales outlook while United Parcel Service Inc added 3.0 per cent on posting a stronger-than-expected quarterly adjusted profit.
While earnings reports are expected to influence trading decisions this week, US stock markets rose in the past two sessions after signs of economic softness suggested the effects of the Federal Reserve’s policy aimed at curbing decades-high inflation were taking root.
Markets are still pricing in a fourth straight 75 basis point rate hike from the Fed on November 2 but as a survey showed US consumer confidence ebbed in October amid rising concerns about inflation and a possible recession next year, bets of another jumbo-sized raise in December eased.
Toggle’s Sette noted that it is not yet a done deal that investors are shifting towards a more dovish Fed.
However, “it’s quite possible that we see a classic Fed error”.
In early trading, the Dow Jones Industrial Average was up 138.99 points, or 0.44 per cent, at 31,638.61, the S&P 500 was up 35.21 points, or 0.93 per cent, at 3,832.55, and the Nasdaq Composite was up 170.87 points, or 1.56 per cent, at 11,123.48.
Advancing issues outnumbered decliners by a 5.16-to-1 ratio on the NYSE and by a 4.03-to-1 ratio on the Nasdaq.
The S&P index recorded 10 new 52-week highs and one new low while the Nasdaq recorded 41 new highs and 76 new lows.
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