Dow ends up 300 points, post best daily gain in a month, with inflation data, corporate earnings ahead – MarketWatch
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Market Snapshot
Last Updated: July 11, 2023 at 4:40 p.m. ET First Published: July 11, 2023 at 5:55 a.m. ET
U.S. stocks post back-to-back gains on Tuesday ahead of a key inflation report on Wednesday. Second-quarter earnings also gather steam later in the week.
Angela Weiss/Agence France-Presse/Getty Images
[]U.S. stocks closed higher Tuesday, with investors primed to take Wednesday’s inflation report in stride, while also hoping for a solid start to second-quarter corporate earnings later this week.
How stocks traded
- The Dow Jones Industrial Average DJIA, +0.93% ended 317.02 points, or 0.9% higher to 34,261.42. It was the biggest daily gain since June 15, according to Dow Jones Market Data.
- The S&P 500 SPX, +0.67% added 29.73 points, or 0.7% to about 4,439.26
- The Nasdaq Composite COMP, +0.55% closed up 75.22 points, or 0.6%, to 13,760.70
[]On Monday, the Dow Jones Industrial Average DJIA, +0.93% rose 210 points, or 0.62%, to 33944, the S&P 500 SPX, +0.67% increased 11 points, or 0.24%, to 4410, and the Nasdaq Composite COMP, +0.55% gained 25 points, or 0.18%, to 13685.
What drove markets
[]Stocks rose for a second straight day on Tuesday as Treasury yields eased further, after rates pulled back on Monday from recent highs.
[]The 10-year Treasury TMUBMUSD10Y, 3.964% yield fell 2.6 basis points to 3.980% on Tuesday.
[]The recent decline in yields “followed some dovish tones” in recent cost-of-living data, including softer household inflation expectations and lower used car prices, “which comes ahead of tomorrow’s all-important U.S. CPI print,” according to Henry Allen, strategist at Deutsche Bank.
[]The June consumer-price index report to be released on Wednesday is expected to show headline annual inflation falling to 3.1%, having hit a multi-decade peak of 9.1% a year before. However, annual core inflation, which strips out volatile items like energy and food prices, is expected to be more elevated at 5%.
[]Still, “I think there’s some optimism about CPI coming in lower [than expected] this week,” said Phillip Colmar, managing partner and global strategist at MRB Partners.
[]“A weaker than forecast figure could signal that inflation is moving tellingly towards the Fed’s [2%] target, which could result in a brief rally if the consensus then changes to one more hike this year as opposed to the two currently in place,” said Richard Hunter, head of markets at Interactive Investor.
[]Read also: S&P 500 could surge 100 points this week on inflation data, says Fundstrat’s Lee
[]Traders are pricing in an over 90% chance that the Fed will raise its benchmark interest rate in July, and an over 30% likelihood that the central bank will raise it by one more time by year-end.
[]Investors are also waiting for second quarter corporate earnings reports. Mega banks like JPMorgan Chase & Co. JPM, +1.56%, Wells Fargo & Co. WFC, +0.99% and Citigroup Inc. C, +1.88% will all announce their results on Friday. The first quarter unfolded amid bank sector failures like Silicon Valley Bank. Analysts will be curious to see how the big banks moved on from there.
[]To be sure, there are unknowns ahead, Scott Sheridan, CEO of the brokerage firm tastytrade, said in a phone interview. That includes the full story on interest rates for 2023, what the upcoming batch of earnings will show, what the inflation data will reveal — and, of course, if the economy can pull off a soft landing.
[]But for now, the market is generally taking the questions in stride, Sheridan noted. It’s an environment where “bad news is fine, and good news is great,” he said.
[]See also: This earnings season, expect companies to keep margins high ‘the usual way, by firing people’
Companies in focus
- Activision Blizzard Inc. ATVI, +10.02% shares finished up 10% after a federal judge denied the Federal Trade Commission’s bid to block the videogame publisher’s acquisition by Microsoft Corp. MSFT, +0.19%
- Amazon AMZN, +1.30% shares closed 1.3% higher, as the e-commerce giant began its Prime Day summer sale which actually lasts two days. The tech giant will be hoping for a boost as sales growth, excluding Amazon’s cloud division, was a meager 8% in the most recent quarter, far below the pre-pandemic pace.
- Uber Technologies Inc. UBER, +3.69% shares ended up 3.7%. This is after reports that its Chief Financial Officer, Nelson Chai, is planning to leave the company though the timing of the exit is undetermined. The exit would be the highest-level exit at the company since it went public in 2019.
- Bank of America Corp. BAC, +1.26% shares gained 1.3%, after orders from federal regulators to pay $250 million for allegedly charging unfair junk fees, withholding credit card rewards and opening fake accounts. The bank “voluntarily reduced overdraft fees and eliminated all non-sufficient fund fees in the first half of 2022,” a spokesperson said.
[]–Jamie Chisholm contributed to the report.
S&P 500 could surge 100 points this week on inflation data, says Fundstrat’s Lee
[]Just as investor faith in the 2023 market rally starts to wobble, Fundstrat’s Tom Lee is back with a new bullish call.
[]Frances Yue covers the cryptocurrency market for MarketWatch.
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