The S&P 500 was 0.2% higher in early trading, coming off a strong three-day winning streak and the Dow Jones Industrial Average was up 54 points
Wall Street trading was steady today, following a three-day winning streak that saw US stocks hold firm amid some recent sharp swings.
The S&P 500 was up by 0.2% in early trading, continuing its strong performance from the past few days. The Dow Jones Industrial Average also rose by 54 points, or 0.1%, as of 9:35am Eastern time, while the Nasdaq composite increased by 0.2%. Shares in Kenvue, the company behind brands such as Band-Aids and Tylenol, surged by 4.9% after it exceeded analysts’ predictions for both profit and revenue in the latest quarter.
Despite posting stronger results for its latest quarter than anticipated, The Walt Disney Co. saw its shares drop by 8.5%. Its revenue fell slightly short of forecasts, and it expects its entertainment streaming business to soften in the current quarter.
These companies are among the last to report their results for the first three months of the year. While the majority of companies have so far surpassed earnings forecasts, they’re not seeing as significant a boost to their stock prices afterward as they typically do, according to FactSet.
Moreover, companies that fail to meet profit expectations have seen their stock prices plummet more the following day than they have historically. Investors seem to be heeding the warnings of critics who have labelled the US stock market as overpriced following its record-breaking run this year.
For stocks to continue their upward trajectory, either profits need to see a significant increase or interest rates need to drop. The latter still appears to be a viable option on Wall Street, especially after last week’s events which traders found promising.
Jerome Powell, Chair of the Federal Reserve, strongly hinted that the central bank is more likely to cut its main interest rate than raise it, despite persistent high inflation readings this year. Additionally, a jobs report released on Friday, which was cooler than expected, suggested that the US economy might manage to maintain stability and avoid a severe recession without fuelling excessive inflation.
Treasury yields, which had been climbing at the start of the year due to diminishing hopes for Federal Reserve interest rate cuts, have been retreating this month, providing some respite for the stock market. The yield on the 10-year Treasury dropped to 4.44% from 4.49% late Monday.
The two-year yield, which is more closely tied to Fed expectations, slipped to 4.81% from 4.83%. Despite yields falling over the past week, strategists at Wells Fargo Investment Institute anticipate that long-term yields will stay high for some time. This is partly due to widespread expectations that inflation will outpace hopes for a while.
Luis Alvarado, a global fixed income strategist, predicts that the 10-year yield will likely hover around its recent range. In other Wall Street news, Crocs saw a 9% surge after posting better-than-expected profit and revenue, thanks to robust international growth.
International Flavors & Fragrances, a company that produces ingredients for food and perfume, enjoyed a 5.7% boost after reporting higher than anticipated profit and revenue. The firm also projected its full-year revenue to hit the upper end of its forecasted range.
Overseas, stock markets in Seoul and Tokyo jumped 2.2% and 1.6% respectively, while other Asian markets showed mixed results. Australia’s S&P/ASX 200 climbed 1.4% following the central bank’s decision to maintain interest rates. European stock were also up.
