NEW YORK, Jan 23 (Reuters) – Wall Street surged on Monday, led by tech stocks as investors embarked on an earnings-heavy week with renewed enthusiasm for buoyant market-leading stocks that have been battered Last year.
All three major stock indexes extended Friday’s rally, gaining momentum as the day progressed. The tech-heavy Nasdaq led the way, boosted by a 4.9% jump in semiconductor stocks (.SOX).
“This is a remarkable rally for many names that did poorly last year,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. “Nobody wants to look sideways with a bunch of money as the market moves away from them.”
The session marks a calm before the storm in a week filled with high-profile earnings reports and a back-end laden with crucial economic data.
Investors are almost certain that the Federal Reserve will implement a small interest rate hike next week, even as the US central bank remains determined to rein in the hottest inflationary cycle in decades.
Financial markets have priced a 99.8% chance of a 25 basis point hike in the federal funds target rate following its two-day monetary policy meeting next Wednesday, according to CME’s FedWatch tool. .
The Dow Jones Industrial Average (.DJI) rose 328.17 points, or 0.98%, to 33,703.66, the S&P 500 (.SPX) gained 55.93 points, or 1.41%, to 4,028.54 and the Nasdaq Composite (.IXIC) added 232.84 points, or 2.09%, to 11,373.28.
All 11 major sectors of the S&P 500 were up, with technology (.SPLRCT) rising the most, jumping 2.8%.
The fourth quarter reporting season kicked into high gear, with 57 of the S&P 500 companies reporting results. Of these, 63% generated earnings above expectations, according to Refinitiv.
Analysts now see fourth-quarter earnings for the S&P 500, in total, falling 3% year-on-year, nearly twice as much as the 1.6% annual decline seen at the start of the year, according to Refinitiv.
This week, Microsoft Corp (MSFT.O) and Tesla Inc, along with a series of heavy industrials including Boeing CO (BA.N), 3M Co (MMM.N), Union Pacific Corp (UNP.N) Dow Inc (DOW.N), Northrop Grumman Corp (NOC.N), are expected to report quarterly results.
Tesla Inc (TSLA.O) jumped 7.8% as chief executive Elon Musk spoke out in his fraud lawsuit over a tweet saying he had the backing to take the electric carmaker private.
Baker Hughes Co (BKR.O) missed quarterly earnings estimates due to inflationary pressures and continued disruption from Russia’s war on Ukraine. Shares of the oil services company fell 0.9%.
Cloud-based software company Salesforce Inc (CRM.N) jumped 3.1% following news that activist investor Elliot Management Corp has taken a multi-billion dollar stake in the company.
Spotify Technology SA (SPOT.N) has joined the growing list of tech-related companies to announce impending job cuts, laying off 6% of its workforce as rising interest rates and the looming possibility of a recession continue to put pressure on growth stocks. Shares of the music streaming company rose 2.1%.
On the economic front, the Commerce Department is expected to release its first “expectation” of fourth-quarter GDP on Thursday, which analysts said should land at 2.5%.
On Friday, the extensive Personal Consumption Expenditure (PCE) report is expected to shed some light on consumer spending, income growth and, most importantly, inflation.
Advancing issues outnumbered declining ones on the NYSE by a ratio of 3.53 to 1; on the Nasdaq, a ratio of 1.95 to 1 favored advancers.
The S&P 500 posted 11 new 52-week highs and no new lows; the Nasdaq Composite recorded 66 new highs and 14 new lows.
Reporting by Stephen Culp; Additional reporting by Shreyashi Sanyal and Johann M Cherian in Bengaluru Editing by Marguerita Choy
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