Wall Street closed sharply higher due to strong corporate earnings

  • Boeing raises deal to sell 777 aircraft to partners
  • Johnson & Johnson and IBM landed on the dollar’s impact warning
  • Halliburton, Hasbro and Trust rise after beating profits
  • Indices Gain: Dow 2.43%, S&P 500 2.76%, Nasdaq 3.11%
  • Biggest one-day percentage gain for the Nasdaq since June 24

(Reuters) – U.S. stocks closed sharply higher on Tuesday as more companies joined major banks in reporting better-than-expected earnings, providing relief to investors worried about rising inflation and Fed tightening that weighed on corporate bottom lines.

S&P 500 . Index (.SPX) It rose 2.8%, the highest close since June 9. NASDAQ Heavy Technology Composite Index (nineteenth) It added 3.1%, marking the largest one-day percentage gain since June 24.

Halliburton stock(HAL.N)It rose 2.1% after the oilfield services provider reported a 41% increase in quarterly adjusted earnings. Read more Toymaker Hasbro Inc (HAS.O)Gaining 0.7% after reporting quarterly earnings ahead of expectations. Read more

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Trust Financial Corp. also beat market estimates for quarterly earnings, sending the bank’s shares up 2.6%.

“Earnings came in better than lower expectations,” said Paul Kim, CEO of Simplify Asset Management in New York.

“So we don’t see the sting of monetary policy tightening and inflation affecting revenue as much as we fear.”

Johnson & Johnson shares lost 1.5 percent, reversing earlier gains. The healthcare giant reported better-than-expected earnings and sales but lowered its profit forecast for the year due to a stronger US currency. Read more

The strong dollar also affected the shares of IBM Corp. for IT devices and services (IBM.N)which beat expectations for quarterly revenue on Monday but warned that damage from forex for the year could be around $3.5 billion.

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A Wall Street sign outside the New York Stock Exchange in New York City, New York, US, October 2, 2020. REUTERS/Carlo Allegri

The US dollar recorded its third consecutive day of declines as markets downplayed the prospects of a full Fed rate hike by a percentage point this month.

Rising inflation initially prompted markets to raise interest rates by 100 basis points at the upcoming Fed meeting later this month, with some policymakers even signaling a 75 basis point increase. Read more

Dow Jones Industrial Average (.DJI) The Standard & Poor’s 500 Index rose 754.44 points, or 2.43%, to 31,827.05 points (.SPX) It rose 105.84 points, or 2.76%, to 3,936.69 points, and the Nasdaq Composite (nineteenth) It added 353.10 points, or 3.11%, to 11,713.15.

“The overall picture has not changed,” Kim said. “We still have lower earnings, high inflation pressures and Fed tightening. So over the long term, I don’t think that kind of rally has any staying power.”

This earnings season, analysts expect overall S&P 500 earnings to grow 5.8% year-over-year, down from estimates of 6.8% at the start of the quarter, according to Refinitiv data.

Volume on US exchanges was 10.95 billion shares, compared to an average of 11.76 billion for the full session over the last 20 trading days.

Advance issues outnumbered declining issues on the New York Stock Exchange by 4.88 to 1 and on the Nasdaq the ratio was 3.40 to 1 in favor of advanced traders.

The S&P 500 hit a new 52-week high and 30 new low; The Nasdaq recorded 31 new highs and 56 new lows.

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(covering Echo Wang) in New York. Additional reporting by Shreyachi Sanyal and Anirudha Ghosh in Bengaluru. Editing by Aaron Koyor, Shunak Dasgupta and Deepa Babington

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Our criteria: Thomson Reuters Trust Principles.

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