Nasdaq rises 1% as traders await key tech earnings
The Nasdaq was up on Tuesday as investors anticipated big tech earnings and priced yields lower for fresh clues about the health of the U.S. economy.
The tech-heavy index added 1.8%, while the S&P 500 rose 1.2%. The Dow Jones Industrial Average added 200 points, or 0.7%.
The yield on the benchmark 10-year Treasury note last fell about 15 basis points to 4.085%, bet on volatility seen Monday and last week. The 2-year Treasury yield last fell about 7 basis points to 4.424%.
Alphabet and Microsoft are among the companies expected to report earnings after the bell as a week with tech as the centerfold continues. Chipotle Mexican Grill is also on deck.
These reports will come after a handful of results before the bell.
UPS, 3M and General Motors all posted earnings above expectations. Shares of UPS and GM rose in early trading, but 3M fell 1.6%.
Coca-Cola also reported better-than-expected earnings, pushing the stock up 1%.
So far this season, the companies have proven that they are perhaps doing better than expected. That’s in part because analysts’ earnings estimates have fallen in recent months as companies grapple with headwinds in the currency market and other growth issues. This could create stocks for rallies on potentially better than expected results.
“‘Earnings have really come down a lot,” said Sam Stovall, chief investment strategist at CFRA. “Maybe investors are happy because it’s up 2% not down 2%, but we also saw reductions in the forecast for 2023. This bear market is likely to play out even if we get a short-term bear rally.”
Meta Platforms reports on Wednesday, followed by Amazon and Apple on Thursday. Given their size and market capitalization, any movement is likely to push the market forward.
The S&P CoreLogic Case-Shiller 20-City home price index released on Tuesday showed home prices fell 1.3% in the 20 major cities surveyed month-over-month in August, but that they were still 13.1% higher than a year ago.
Tuesday’s moves come after a back-to-back rally.
The Dow gained 417.06 points, or 1.3%, on Monday. The Nasdaq Composite ended up 0.9% and the S&P 500 added about 1.2%, with nine of 11 sectors ending higher, led by health care.
“The market has become accustomed to real price volatility, almost insensitive to it,” said Jeff O’Connor, head of market structure for the Americas at Liquidnet. “And the wild moves make trading conditions much more difficult.”