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Wall Street Rallies and Adds to Its Hot Start to the Week
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By Associated Press
Published 1 month ago on
April 23, 2024

U.S. stocks are rallying Tuesday and adding to their hot start to the week. (AP/Peter Morgan)

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NEW YORK — U.S. stocks are rallying Tuesday and adding to their hot start to the week.

The S&P 500 was up 1% in midday trading to pull further out of the hole created by a six-day losing streak. The Dow Jones Industrial Average was up 226 points, or 0.6%, as of 11 a.m. Eastern time, and the Nasdaq composite was 1.4% higher.

A report on U.S. business activity that was weaker than expected was helping to support the market. Financial markets are in an awkward phase where the hope is for the economy to stay solid enough to avoid a recession, but not so hot that it keeps upward pressure on inflation.

The preliminary report from S&P Global released Tuesday seemed to hit that sweet spot. Treasury yields eased in the bond market, and stocks added to gains immediately after its release.

Impact of Earnings Reports on Trading

A flood of earnings reports was also dictating much of trading. Danaher was one of the strongest forces lifting the S&P 500 after it reported stronger profit for the first quarter than analysts expected. It rose 7% after citing strength in its bioprocessing and molecular diagnostics businesses.

Kimberly-Clark gained 5.4% after the maker of Huggies, Kleenex and Kotex reported better-than-expected profit for the first quarter and raised its earnings forecast for the full year. General Motors revved up by 4.3% after topping forecasts thanks to sales of pickup trucks and other higher-profit vehicles. GE Aerospace climbed 5.8% after reporting stronger profit for the latest quarter than analysts expected.

They helped overshadow a 6.1% drop for Nucor after the steelmaker fell short of forecasts for both profit and revenue.

MSCI, whose investment indexes guide much of the industry, fell 12.3% after reporting weaker revenue growth than expected.

Sherwin Williams sank 4.1% after it likewise missed expectations, in part because of weaker paint sales for new homes amid the industry’s challenges with high mortgage rates.

JetBlue Airways lost 17.4% despite topping expectations for the latest quarter. Its forecasts for upcoming revenue came up short of what some analysts expected. Other airlines also weakened, including a 2.3% fall for American Airlines.

Expectations for Tesla’s First-Quarter Results

The market’s main event may be arriving after trading ends for the day. That’s when Tesla will become the first of the “Magnificent Seven” stocks that accounted for most of last year’s gains for the S&P 500 to report its first-quarter results. Expectations are high after the small handful of stocks rocketed to big gains in 2023, and they’ll need to at least match them to justify their prices.

With skeptics still calling the broad stock market too expensive, criticism would ease either if companies produce higher profits or if interest rates fall. The latter has been looking less likely.

Top officials at the Federal Reserve warned last week they may need to keep interest rates high for a while in order to ensure inflation is heading down to their 2% target. That was a big letdown for financial markets, dousing hopes that had built after the Fed signaled earlier that three interest-rate cuts may come this year.

Lower rates had appeared to be on the horizon after inflation cooled sharply last year. But a string of reports this year showing inflation has remained hotter than expected has raised worries about stalled progress.

That’s why Tuesday’s report suggesting a slowdown in growth for overall business activity across the country was so welcomed.

The yield on the 10-year Treasury fell to 4.58% to relieve the pressure on stocks broadly, particularly high-growth ones and those that pay high dividends. The 10-year yield had been at 4.64% just before the report’s release and at 4.61% late Monday.

The two-year Treasury yield, which moves more on expectations for Fed action, had a similar drop. It fell to 4.93% from 4.97% late Monday.

In stock markets abroad, indexes rose across much of Europe. They were mixed earlier in Asia. Stocks jumped 1.9% in Hong Kong but fell 0.7% in Shanghai.

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