NEW YORK: Wall Street stocks rallied for a third straight session on Tuesday (Oct 25), propelled by a drop in US Treasury yields and generally solid corporate earnings.
The Dow Jones Industrial Average rose 337.12 points, or 1.07%, to 31,836.74, the S&P 500 gained 61.77 points, or 1.63%, to 3,859.11 and the Nasdaq Composite added 246.50 points, or 2.25%, to 11,199.12.
An index of consumer confidence weakened more than anticipated in October as concerns about costs of living intensified.
The data was the latest to suggest a slowing US economy, a dynamic that markets paradoxically welcome because of the prospect of a moderation in Federal Reserve policies.
Investors were pleased to see a drop in the yield of the 10-year US Treasury note, a proxy for Fed monetary policy.
“What it offers is confirmation that what the Fed is trying to accomplish is starting to work,” said Art Hogan, analyst at B. Riley Financial.
He also said that corporate earnings thus far have been “better than feared”, giving the market more running room.
“There’s increasing discussion about a light at the end of the tunnel for Fed rate hikes,” said Bill Merz, head of capital market research at US Bank Wealth Management in Minneapolis. Merz also cautioned that it wouldn’t be known for some time whether decades-high inflation was “decisively headed toward the Fed’s target”.
“We’re seeing a bit of a reprieve in the dollar and long-term bond yields have come down a little bit,“ Merz added. “Those factors are combining to provide room for a bit of a rally.”
Yields of 10-year Treasuries pulled pack on hopes that the Federal Reserve could begin easing its battle against inflation.
A mixed brew of earnings and downbeat forecasts, usually a negative for markets, suggested the barrage of interest rate hikes from the Fed is beginning to be felt, raising hopes that the central bank could pull back on the size of rate increases after its Nov 1-2 policy meeting.
Among individual companies, Coca-Cola gained 2.5% after reporting higher profits fuelled in part by price increases. However, Coca-Cola executives pointed to signs that consumers are starting to feel the pinch from inflation.
General Motors also pushed higher, climbing 3.6% following better-than-expected profits as the automaker said it is still seeing strong consumer demand for autos.
But General Electric dropped 0.5% after reporting a quarterly loss of US$55 million and lowering its full-year outlook as it grapples with higher costs.
Shares of Google parent Alphabet Inc dropped as much as 6% in after hours trading after the company missed quarterly revenue estimates.
Microsoft Corp fell more than 2% in after hours trading despite its revenue beat. – AFP, Reuters
Source: The Sun Daily
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