Stocks rose on Tuesday as Wall Street ignored the tightening of Covid policies in China to focus instead on a series of positive earnings reports and the possibility of a smaller future rate hike in a short period of time. The trading week is shortened during the holiday season.
The Dow Jones Industrial Average closed at 397.82 points, or 1.18%, higher at 34,098.10. The S&P 500 rose 1.36% to close at 4,003.58, closing above 4,000 for the first time since September. The Nasdaq Composite also rose 1.36% to 11,174.41.
The mixed earnings results led to a couple of big stock moves. Best Buy rose about 12.8% after the electronics retailer raised its 2023 financial outlook and beat earnings expectations, while Abercrombie & Fitch and American Eagle Outfitters rose 21.4 percent and 11.4 percent, respectively. nearly 18.2% thanks to their own income. On the other hand, Zoom fell about 3.9% and Dollar Tree fell 7.8% after reporting disappointing earnings and a lower-than-expected outlook, respectively.
China saw its first deaths on the mainland from Covid since May over the weekend, prompting officials to step up procedures to limit the spread of the virus. Just a week ago, the country began easing some of its strict Covid-19 measures, on the way towards a looser policy.
According to Seema Shah, chief global strategist at Principal Asset Management, China’s reopening will be “extremely positive growth”.
“As always, investors should carefully monitor developments as the honest implementation of the reopening plan will be key to the investment outlook,” she said in a note on Tuesday. .
Stocks were supported by falling bond yields as investors’ attention turned to 2023. Investors also weighed comments from Federal Reserve leaders. On Monday, Cleveland Fed President Loretta Mester said recent inflation data was promising and that she would advocate cutting interest rates into the future. That could mean the Fed will soon hit its final rate, between 4% and 5%.
“It’s a huge burden on investors, who are completely out of business,” said Phil Camporeale, managing director and portfolio manager at JPMorgan Asset Management on CNBC’s “Squawk on the Street.” There’s nowhere to hide this year.
Oil prices rose after Saudi Arabia said OPEC+ would stick with the production cuts it announced earlier.
Investors will be watching earnings reports from HP Inc and Nordstrom after the bell. They will also keep an eye on economic reports on Wednesday, including initial jobless claims and consumer sentiment.
The stock market will be closed on Thursday for Thanksgiving and will close early on Friday.