U.S. stocks ended firmly higher Tuesday as investors extended Wall Street's solid October rally amid a parade of blue chip corporate earnings before and after the closing bell and a pullback in Treasury bond yields.
A softer U.S. dollar, which was marked 1% lower on the session at 1110.851, and a further easing in Treasury bond yields gave global stocks a modest overnight boost, but with half a dozen S&P 500 earnings before the start of trading, and tech giants Alphabet (GOOGL) and Microsoft (MSFT) after the bell, investors look to be adopting a cautious tone heading into the opening bell.
The S&P 500 gained 61.77 points, or 1.63% by the close of trading while the Dow Jones Industrial Average was up 337.12 points. The tech-focused Nasdaq was up 246.5 points gain thanks in part to the pullback in Treasury bond yields.
Third quarter S&P 500 earnings are expected to rise by around 3.1% from last year, to a collective $458.9 billion, with forecasts for the final three months of the year indicating a growth rate of 4.4% and a collective total of $478.6 billion, according to data from Refinitiv.
Broader economic growth remains a larger question, however, following PMI data for October yesterday that showed business activity contracted for a fourth consecutive month, intensifying concerns that the world's largest economy is heading into recession.
“From the World Bank, the World Trade Organization, and the World Economic Forum, to the IMF and even Elon Musk, the consensus is growing that the world economy will fall into recession in 2023," said Nigel Green of London-based financial advisory deVere Group.
"Corporations around the world are tightening their belts and suggesting earnings will be lower, as demand drops, supply chain issues remain, and borrowing gets more expensive as central banks, determined to control inflation, raise interest rates,” he added.
That concern, as well as some dovish signaling from Federal Reserve officials, has lead to a pullback in bond yields, with benchmark 10-year Treasury notes pegged at 4.102% in overnight trading, down from a fifteen year high of 4.375% late last week.
Staying in Treasuries, benchmark 2-year notes were marked at 4.477% following the auction of $42 billion in new paper that attracted drew a firmer-than-expected bid-to-cover ratio of 2.59.
Shares of Coca-Cola (KO) ended up 2.4% after it posted better-than-expected third quarter earnings, and boosted it full-year sales forecast, as price hikes helped revenues rise firmly ahead of overall volumes.
General Motors (GM) jumped 3.6% after reporting stronger-than-expected third-quarter earnings and repeating its full-year profit outlook as higher car prices helped fuel record sales for the biggest U.S. automaker.
3M (MMM) ended little changed after it lowered its full-year profit guidance amid a bigger hit from the surging U.S. dollar and weaker respirator sales.
General Electric GE ended off 0.5% after its third-quarter earnings miss as investors looked to the industrial group's better-than-expected sales and cash flow forecasts.
United Parcel Service (UPS) slipped 0.3% even after it posted stronger-than-expected September earnings, while repeating its full-year profit guidance, thanks to solid gains in the group's domestic business that offset weakness in supply chain sales.
In overseas markets, better-than-expected tech earnings and political stability with a new Prime Minister in the United Kingdom helped the region-wide Stoxx 600 to a 1.44% gain in Frankfurt, with a firmer pound holding down the FTSE 100, which was marked 0.01% lower in London.
Overnight in Asia, stocks languished at the lowest levels in two years, following on a from a major sell-off in China stocks yesterday in reaction to Premier Xi Jinping's third term as President following the
The region-wide MSCI ex-Japan index was marked 0.04% lower heading into the close of trading, while Japan's Nikkei 225 gained 1.02% amid a modest nudge higher for the yen, which, at 148.90, is still within touching distance of the lowest levels in 32 years.
