NEW YORK — Stocks rose again Thursday after more companies reported better-than-expected earnings, while yields rose after a Federal Reserve official warned the end of rate hikes may not come as quickly as Wall Street hoped had.
The S&P 500 gained 0.9%, adding to its rally from the previous day as hopes mount that the US government can avoid a catastrophic default on its debt. The Dow Jones Industrial Average gained 115 points, or 0.3%, while the Nasdaq Composite gained 1.5%.
Video game maker Take-Two Interactive posted the biggest gain in the S&P 500 after forecasting a huge jump in revenue for the following fiscal year. That fueled speculation that Grand Theft Auto VI is on the way, and the stock rose 11.7%.
Bath & Body Works was just behind, up 10.7%. The company reported higher sales and earnings than analysts had expected for the most recent quarter.
Also adding to Wall Street’s support was another retailer, Walmart, which rose 1.3% after reporting better-than-expected results for the most recent quarter. The company has raised its full-year financial guidance but said buyers remain cautious about their spending.
Retail came under scrutiny as strong US household spending has been one of the main pillars to keep the slowing economy from recession.
Despite a long list of concerns, stocks have remained remarkably resilient since early April. A key reason for this is hope fed would ease up on its rate hikes, which have slowed inflation, at the cost of a recession and falling financial markets.
The popular bet was that the Fed would take a break at its next meeting in June. But Dallas Fed President Lorie Logan cooled some of those hopes in a prepared speech for the Texas Bankers Association.
“Data over the coming weeks may yet show that it is appropriate to skip a meeting,” Logan said. “But today we are not ready yet.”
Treasury yields rose as traders increased bets that the Fed would hike rates again at its June meeting, though the majority still forecast a pause.
The yield on the 10-year government bond rose to 3.64% from 3.57% late Wednesday. The two-year yield, which is closer to Fed expectations, rose to 4.25% from 4.16%.
Higher interest rates have already slowed parts of the economy and contributed to three of the largest US bank failures in history since March. Economic reports on Thursday were mixed.
A study showed fewer workers filed for unemployment benefits last week than expected. While this is good news for workers and a solid labor market so far, it could also put upward pressure on inflation. That’s what the Fed is desperate to cut, raising interest rates to their highest levels since 2007.
A separate report said manufacturing in the mid-Atlantic region continued to weaken, although not quite as much as economists had expected.
Cisco Systems stock oscillated between small gains and losses throughout the day after the company reported better-than-expected results for the most recent quarter and raised its guidance for the current quarter. Analysts said some investors may be disappointed with concerns about weaker-than-expected growth in the following fiscal year. The stock ended up up 1.2%.
Most companies in the S&P 500 have reported earnings that were higher than analysts had expected for the first three months of the year. However, according to FactSet, they are still on track to report a second consecutive quarter of weaker earnings than last year.
Overall, the S&P 500 rose 39.28 points to 4,198.05. The Dow rose 115.14 to 33,535.91 and the Nasdaq climbed 188.27 to 12,688.84.
In overseas equity markets, indices rose across much of Europe and Asia after Wednesday’s Wall Street rally extended west. That surge came after President Joe Biden said he was confident of reaching a deal with Republicans that would allow the US government to increase its credit limit and borrow more.
That could avert a possible first default by Washington. The government is expected to run out of money to pay its bills as early as June 1 unless an agreement is reached. According to economists, a default by the US federal government could have catastrophic consequences for financial markets and the economy.
In Asia, Japan’s Nikkei 225 rose 1.6%, continuing its strong recent rise, while in Europe, Germany’s DAX returned 1.3%.
The S&P 500 gained 0.9%, adding to its rally from the previous day as hopes mount that the US government can avoid a catastrophic default on its debt. The Dow Jones Industrial Average gained 115 points, or 0.3%, while the Nasdaq Composite gained 1.5%.
Video game maker Take-Two Interactive posted the biggest gain in the S&P 500 after forecasting a huge jump in revenue for the following fiscal year. That fueled speculation that Grand Theft Auto VI is on the way, and the stock rose 11.7%.
Bath & Body Works was just behind, up 10.7%. The company reported higher sales and earnings than analysts had expected for the most recent quarter.
Also adding to Wall Street’s support was another retailer, Walmart, which rose 1.3% after reporting better-than-expected results for the most recent quarter. The company has raised its full-year financial guidance but said buyers remain cautious about their spending.
Retail came under scrutiny as strong US household spending has been one of the main pillars to keep the slowing economy from recession.
Despite a long list of concerns, stocks have remained remarkably resilient since early April. A key reason for this is hope fed would ease up on its rate hikes, which have slowed inflation, at the cost of a recession and falling financial markets.
The popular bet was that the Fed would take a break at its next meeting in June. But Dallas Fed President Lorie Logan cooled some of those hopes in a prepared speech for the Texas Bankers Association.
“Data over the coming weeks may yet show that it is appropriate to skip a meeting,” Logan said. “But today we are not ready yet.”
Treasury yields rose as traders increased bets that the Fed would hike rates again at its June meeting, though the majority still forecast a pause.
The yield on the 10-year government bond rose to 3.64% from 3.57% late Wednesday. The two-year yield, which is closer to Fed expectations, rose to 4.25% from 4.16%.
Higher interest rates have already slowed parts of the economy and contributed to three of the largest US bank failures in history since March. Economic reports on Thursday were mixed.
A study showed fewer workers filed for unemployment benefits last week than expected. While this is good news for workers and a solid labor market so far, it could also put upward pressure on inflation. That’s what the Fed is desperate to cut, raising interest rates to their highest levels since 2007.
A separate report said manufacturing in the mid-Atlantic region continued to weaken, although not quite as much as economists had expected.
Cisco Systems stock oscillated between small gains and losses throughout the day after the company reported better-than-expected results for the most recent quarter and raised its guidance for the current quarter. Analysts said some investors may be disappointed with concerns about weaker-than-expected growth in the following fiscal year. The stock ended up up 1.2%.
Most companies in the S&P 500 have reported earnings that were higher than analysts had expected for the first three months of the year. However, according to FactSet, they are still on track to report a second consecutive quarter of weaker earnings than last year.
Overall, the S&P 500 rose 39.28 points to 4,198.05. The Dow rose 115.14 to 33,535.91 and the Nasdaq climbed 188.27 to 12,688.84.
In overseas equity markets, indices rose across much of Europe and Asia after Wednesday’s Wall Street rally extended west. That surge came after President Joe Biden said he was confident of reaching a deal with Republicans that would allow the US government to increase its credit limit and borrow more.
That could avert a possible first default by Washington. The government is expected to run out of money to pay its bills as early as June 1 unless an agreement is reached. According to economists, a default by the US federal government could have catastrophic consequences for financial markets and the economy.
In Asia, Japan’s Nikkei 225 rose 1.6%, continuing its strong recent rise, while in Europe, Germany’s DAX returned 1.3%.
