U.S. stocks climbed Thursday, reversing some of the prior day’s losses, as investors debated the outlook for interest rates and reviewed another batch of corporate earnings from bellwethers such as
The S&P 500 rose 0.7%, while the Dow Jones Industrial Average added 0.7%. The technology-heavy Nasdaq Composite Index gained 1.1%.
Indexes had retreated Wednesday, with the S&P 500 falling 1.1%, as investors focused on comments from Federal Reserve policy makers. Fed Chair
Jerome Powell
and others have continued to stress that rates will need to remain high for some time to ensure inflation is brought back under control.
Stock markets have oscillated in recent days, as investors have adjusted their expectations for monetary policy following economic data and comments from Fed officials.
“Last week was an enormous week in a whole load of ways, from earnings, economic data and from central banks,” said Niall O’Sullivan, chief investment officer of multiasset strategies for Europe the Middle East and Africa at Neuberger Berman. “What is going on this week is the chewing of the cud as we figure out what it all means.”
The labor market has demonstrated resilience despite rate increases, prompting concerns that the Fed might decide to continue tightening monetary policy further than previously thought. Data released Thursday showed initial jobless claims, a proxy for layoffs, at 196,000 in the week to Feb. 4. That was up by 13,000 from a week earlier.
It could be years rather than months before inflation is properly curbed, said Mr. O’Sullivan, adding that the Fed is unlikely to lower rates at all this year.
“Inflation is going to be harder to tame” this time around, Mr. O’Sullivan said. “Central banks will have to be at it much longer than many people think.”
At the same time, some investors have embraced the idea that the Fed could begin lowering rates this year as inflation moderates. All three major indexes have risen to start the year.
The floor of the New York Stock Exchange on Wednesday. In recent sessions investors have had a raft of earnings, economic data and central-bank pronouncements to consider.
Photo:
Spencer Platt/Getty Images
Investors are also monitoring earnings for signs of how rapid inflation and higher borrowing costs are affecting businesses.
Lyft,
and
are set to report earnings after markets close.
Walt Disney stock jumped about 3% after the entertainment giant said in its earnings call late Wednesday that it plans to slash jobs and cut $5.5 billion in costs. Shares of
rose 1.6% after the beverage company beat earnings expectations and reported strong sales growth.
Conversely, Mattel shares sank 10%, after the maker of Barbie dolls and Hot Wheels cars said quarterly sales fell 22% as cash-strapped consumers pulled back on spending.
With about two-thirds of companies in the S&P 500 having reported fourth-quarter results, about 70% have topped Wall Street consensus expectations, compared with the five-year average of 77%, according to FactSet.
Companies in the S&P 500 are set to report a 5% decline in profit, according to a blend of actual results and estimates for those yet to report. That would mark the first quarterly earnings decline since the depths of the Covid-19 pandemic in 2020.
Elsewhere,
stock gained 4.9% after a government report indicated that the driver of a Tesla Model S hadn’t engaged any of Tesla’s advanced driver-assistance features before crashing north of Houston in April 2021.
shares rose 3.1% after The Wall Street Journal reported
Dan Loeb
‘s hedge fund Third Point has a stake in the customer management software maker, the fifth activist investor to pile in.
Yields on U.S. government bonds declined for a second day. The benchmark 10-year yield fell to 3.599% from 3.652%. Bond yields and prices move in opposite directions.
In commodity markets, Brent crude, the international oil benchmark, fell 1.1% to $84.15 a barrel. Investors are monitoring signs of Chinese demand and assessing how the country’s reopening could revive its appetite for oil.
Overseas, European stock markets continued a rally driven by expectations that the region’s economic fortunes could be less bleak than feared. Germany’s Dax and Italy’s FTSE MIB rose 0.9% and 0.4%, respectively. The U.K.’s FTSE 100 added 0.3% . The pan-continental Stoxx Europe 600 added 1%.
Asian indexes were more mixed. In Japan, the Nikkei 225 edged down 0.1%, while in Hong Kong the Hang Seng Index rose 1.6%. The Shanghai Composite index gained 1.2%.
Write to Will Horner at william.horner@wsj.com
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