Stocks increased on Tuesday as Wall Street ignored China’s tighter covid regulations and instead paid attention to a number of positive earnings announcements and the possibility of lesser rate hikes in the future during a trading week that has been truncated by holidays.
By 322 points, or 0.96%, the Dow Jones Industrial Average increased. The Nasdaq Composite increased 0.78%, while the S&P 500 increased 1%.
A few significant stock moves were caused by mixed earnings reports. Best Buy increased its share price by about 11% after exceeding earnings estimates and raising its fiscal outlook for 2023. Abercrombie & Fitch and American Eagle Outfitters each had their own share prices rise by 19% and 16%. On the other hand, Zoom dropped 5.4% and Dollar Tree dropped around 9% after announcing disappointing profits and, respectively, a weaker-than-expected outlook.
Bond yields began to decline, which boosted stocks as investor focus shifted to 2023.
The weekend saw the first Covid-related deaths in China’s mainland since May. Investors became concerned that the nation may reinstate measures intended to stop the spread of the virus, which would be bad for business. The nation started loosening up some of its strict covid regulations just a week ago.
China reopening would be “extremely growth positive,” according to Seema Shah, chief global strategist at Principal Asset Management
“As ever though, investors should cautiously monitor developments as faithful execution of the reopening plan will be key to the investment outlook,” she said in a Tuesday note.
Investors also considered statements made by Federal Reserve officials. Loretta Mester, president of the Cleveland Fed, stated on Monday that she would support future decreased interest rate hikes and that recent inflation data is encouraging. That may indicate that the Fed’s terminal rate, which is between 4% and 5%, may be reached soon.
“That’s a huge weight off the shoulders of investors that have had absolutely nowhere to hide this year,” said Phil Camporeale, managing director and asset manager at JPMorgan Asset Management on CNBC’s “Squawk on the Street.”
After Saudi Arabia indicated that OPEC+ will maintain the output reductions it had previously promised, oil prices increased.
Investors will be keeping an eye on Nordstrom’s and HP Inc.’s earnings reports following the bell, as well as Wednesday’s economic updates, which include data on the purchasing manager index and initial jobless claims.
Due to the Thanksgiving holiday, the stock market will be closed on Thursday and close early on Friday.
Original article posted here.
