© Reuters. FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., April 4, 2022. REUTERS / Brendan McDermid / File Photo
By Stephen Culp
NEW YORK (Reuters) – Wall Street’s rally ended sharply higher on Wednesday, helped by a rebound in interest-sensitive growth stocks as investors pored over hot inflation data and mixed quarterly results.
Falling US Treasury yields helped the tech Nasdaq lead all three major US stock indexes higher, with semiconductors outperforming the broader market. [US/]
Nasdaq is up more than 2% while and Dow is up more than 1%.
“Bond yields have probably already outdone themselves and they are heading lower today,” said David Carter, managing director of Wealthspire Advisors in New York. Advisors in New York. “This helps most stocks, but especially growing sectors like technology.”
JPMorgan Chase & Co (NYSE:) sets first-quarter earnings season off to a bad start, reporting a 42% drop in quarterly profit. Positive results from America’s largest lender sent its shares down 3.2%.
On the brighter side, Delta Air Lines (NYSE:) results beat expectations and it forecasts current-quarter profit due to “historically high” demand. Its 6.2% increase in market share is contagious; The broader S&P 1500 airline index rose 6.8%.
“It’s great when demand is so strong,” added Carter. “However, pushing inflation higher, which will force the Fed to continue raising rates, leads to weaker equity markets.”
“Business is good. Almost too good.”
Strong demand also sent the Labor Department’s producer price index to 11.2% year-on-year growth, the hottest annual gain since the Labor Department began tracking annual data. in 2010.
Core PPI and other key indexes have risen above the Federal Reserve’s 2% average annual inflation target.
IMAGE: US Inflation Meter https://graphics.reuters.com/USA-STOCKS/zjvqkdrwavx/inflation.png
Minutes from the Fed’s most recent policy meeting and subsequent comments from its members prompted market participants to place easy odds for a series of 50 basis point rate hikes. in the coming months, as the central bank applies subtle tightening to curb inflation without provoking a recession.
“It’s clear that now the Fed is singing the same song again, and more and more tightening,” Carter said. “However, much of this is already priced in and expected.”
The S&P 500 index rose 344.23 points, or 1.01%, to 34,564.59, the S&P 500 index gained 49.14 points, or 1.12%, to 4,446.59 and added 272.02 points, or 2.03% to 13,643.59.
Of the 11 major S&P 500 sectors, consumer discretionary stocks posted the biggest percentage gain, up 2.5%.
Analysts estimate the corporate earnings season to be less optimistic. Annual compounded S&P 500 earnings growth for the first three quarters of 2022 is estimated at 5.4% on Wednesday, down from 7.5% at the start of the year.
On Thursday, the week of shortened holidays will end with results from a host of major banks, including Morgan Stanley (NYSE:), Citigroup Inc (NYSE:), Goldman Sachs Group Inc (NYSE:), and Wells Fargo (NYSE:) & Co.
Additional issues outnumbered discount issues on the NYSE by a ratio of 2.92 to 1; on Nasdaq, a ratio of 2.87 to 1 favors the bulls.
S&P 500 announces 19 52-week highs and 11 new lows; Nasdaq Composite recorded 48 new highs and 168 new lows.
Volume on US exchanges was 10.52 billion shares, compared with an average of 12.33 billion over the last 20 trading days.
