- Major averages posted a straight day-2 of gains.
- Futures gain after big techs’ and banks’ reported earnings.
- Investors keen on key UK, CAD CPI data.
Strong corporate earnings reports helped prolong a surge to start the week as stocks increased for a second straight day on Tuesday.
To conclude at 30,523.80, the Dow Jones Industrial Average increased by 337.98 points, or 1.12%. To 3,719.98, the S&P 500 increased 1.14%. At 10,772.40, the Nasdaq Composite gained 0.90%.
The Nasdaq experienced its biggest day since July on Monday, rising more than 3%. Those gains built on that day’s larger upward trend.
Goldman Sachs increased by 2.3% to support the Dow after the investment bank exceeded forecasts for quarterly earnings and revenue thanks to solid trading results.
The financial industry as a whole performed better on Tuesday as a result of that report, which followed a solid run of bank earnings that included gains from Bank of America and Bank of New York Mellon on Monday.
After exceeding projections for earnings per share, Lockheed Martin also increased 8.7%.
The U.S. markets have just reached their year-lows due to fears of a recession and excessively aggressive central banks, but the strong start to earnings season may indicate that the economy is now doing better than initially thought.
Earnings for the third and fourth quarters should demonstrate that the fundamentals are still supported by a strong labor market and Covid’s reopening.
The rhetoric and interest rates of the world’s central banks, which are gradually becoming less negative, will probably continue to affect equity valuation.
As a result, strong 2H22 results, low equity positioning, extremely pessimistic sentiment, and more fair valuation have set the stage for equities to rise through the end of the year.
Stock Futures Climb
At some point, Tuesday’s trading was erratic since many investors don’t seem to have faith in the rally. Early trading saw the averages reach their best point, with the Dow rising more than 600 points.
However, when U.S. Treasury yields increased, the averages began to decline. At two other times during the session, the Nasdaq momentarily moved in the opposite direction.
However, following the major averages’ second consecutive day of advances on Tuesday evening, stock futures also climbed. The Nasdaq 100 futures saw an increase of 1.19%. S&P 500 futures increased by 0.8%, while Dow Jones Industrial Average futures increased by 165 points, or 0.54%.
Tech Stocks Updates
Salesforce gained 4.3% after activist Starboard Value LP disclosed a stake in the software powerhouse, making it the Dow’s best-performing stock overall.
For the third quarter, Netflix announced profitability and revenue that above expectations in addition to significant subscriber growth. Extended trading saw a 14% increase in share price.
Next week will see the peak of the tech earnings season, but IBM and Tesla will report on Wednesday. Later this week, Snap, a social media company, will report.
Upcoming Release: UK CPI Index and Canada CPI Index
Investors anticipate Wednesday’s home starts for economic data. The so-called Beige Book, the Federal Reserve’s report on the situation of the economy at the moment, is eagerly awaited.
Additionally, traders’ attention will turn to the crucial Consumer Price Index (CPI) reports for the UK and Canada.
UK CPI Index
On Wednesday, October 19 at 6:00 GMT, the Office for National Statistics (ONS) in the UK will announce the September CPI report. The consensus anticipates that the headline CPI and Core CPI will both print at 10.0% year over year.
The Consumer Price Index (CPI) including owner-occupied housing prices increased by 8.8% in the 12 months leading up to September 2022, which is an increase from 8.6% in August and a return to the previous peak reached in July.
Canada CPI y/y and m/m
Trimmed and common CPI y/y and CPI m/m data from the Bank of Canada will also be released Wednesday. For the third month in a row, it’s predicted that the headline pace will decline but the core rates won’t change much.
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