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Wall Street’s major indices had climbed off session highs but were still on track to post gains for a third straight session for the first time since early September. Treasury yields sank and the dollar fell.
Investors digested quarterly earnings from several high-profile companies and looked ahead to scheduled reports from megacap technology firms Microsoft and Alphabet.
U.S. stocks posted solid gains in the previous two sessions, helped by speculation that the Federal Reserve would be able to slow down its pace of rate hikes after its policy meeting next week.
By late afternoon, the benchmark S&P 500 (SP500) had gained 1.23% to 3,844.18 points. The blue-chip Dow (DJI) was up 0.79% to 31,747.48 points. It had notched an over six week closing high on Monday.
The tech-heavy Nasdaq Composite (COMP.IND) jumped 1.79% to 11,148.68 points, boosted by Netflix, Meta and Apple. The index, which is the most rate-sensitive of the three, also rose due to the fall in yields.
The 10-year Treasury yield (US10Y) was down 13 basis points to 4.10%. The 2-year yield (US2Y) was down 4 basis points to 4.46%. The dollar (DXY) was also lower.
Earnings reports dominated headlines on Tuesday. Logistics giant UPS, automaker General Motors and soft drinks behemoth Coca-Cola all rose after beating expectations on quarterly profit. On the other hand, Dow 30 component 3M fell after posting a revenue miss, while industrial major General Electric also declined after cutting its full year profit forecast.
Microsoft and Alphabet are on tap to report after the closing bell. Given their sheer size and market capitalization, any moves in their stock after their earnings will be significant. According to Defiance ETFs CEO Sylvia Jablonski, strong results from the megacap names could trigger a year-end rally.
All eleven S&P sectors were higher in morning trade with the exception of Energy. Real Estate and Materials were the top gainers.
Turning to economic news, home prices dropped more than expected in Aug., according to the S&P Corelogic Case-Shiller Home Price Index, in another sign that higher interest rates are helping to cool the economy.
“The housing market is especially vulnerable to Federal Reserve Chair Powell’s incessant chant of ‘hike, hike, hike,'” UBS’ Paul Donovan wrote. “House prices do not directly impact CPI (because the owners’ equivalent rent housing measure is nothing to do with the real world). There are some knock-on effects to sectors like furniture and appliances.”
The Conference Board’s measure of October consumer confidence fell more than expected. Figures came in at 102.5 compared to the consensus 106 level.
“US conference board consumer sentiment data is subject to political partisanship, especially this close to the mid-term elections,” Donovan said. “This generates responses rooted in party platforms rather than economic reality.”
Among other active stocks, PayPal gained after Amazon enabled Venmo payments ahead of the holiday shopping season.
