Stocks Rise as Corporate Earnings Beat Expectations Again

Stocks rose for a second day on Tuesday, posting a small gain after a batch of better-than-expected earnings reports from big companies.

The S&P 500 rose 1.1 percent, posting a 2.7 percent gain on Monday and pushing the index further into positive territory for the month.

Investors are watching companies reporting earnings this quarter to get a sense of how they are doing as concerns about persistent inflation and a possible recession mount. Goldman SachsJohnson & Johnson and Lockheed Martin reported quarterly earnings that beat analysts’ expectations on Tuesday, a day after Bank of America, Charles Schwab, and other pioneering firms reported surprisingly strong results. That was in part because forecasts had been lowered, given economic jitters: Goldman’s third-quarter profit fell more than 40 percent from a year earlier.

The KBW Bank Index, which tracks big banks, rose about 1.1 percent on Tuesday. The index rose 2.6 percent from Thursday, just before major banks began reporting earnings. Still, the index is down 23 percent since the beginning of the year.

Some analysts have warned against reading market gains, describing them as “bear market rallies” that will eventually give way to more selling. Even after big gains in three of the last four trading sessions, the S&P 500 is down more than 20 percent this year, the threshold for a bear market.

“When you have bad news day in and day out and the market has been down day in and day out, people will latch onto whatever good news they get and magnify it,” said Ed Cofrancesco, chief executive of International Assets Advisory.

A survey of fund managers by Bank of America said the market could be poised for another bear market rally if US Treasury yields, a benchmark for borrowing costs, remain below target. 4 percent. The yield on the 10-year Treasury note fell just below that level on Tuesday and the two-year note fell to 4.4 percent. Yields move inversely to prices.

The shifts in the markets have come as the Federal Reserve’s efforts to rein in inflation have proven difficult, making another big rise in interest rates all but certain when central bank policymakers meet. next time. early november. Central bankers were previously expected to discuss slowing interest rate rises in November, but worse-than-expected inflation data makes it likely that no turnaround will occur until later in the year.

Uncertainty around the Fed’s path for rates later this year and next, and the outlook for the economy, mean equities could remain shaky for some time.

“We don’t think the conditions are in place for a sustained rally,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said in an email. “Economic growth is likely to continue to slow at the start of the new year.”

Elsewhere, London’s FTSE 100 closed 0.2 percent higher, adding to Monday’s gains after Jeremy Hunt, the new Chancellor of the Exchequer, overturned Prime Minister Liz Truss’ position. . tax reduction plan. In Europe, the Stoxx 600 rose 0.3 percent, Hong Kong’s Hang Seng closed 1.8 percent higher and Tokyo’s Nikkei 225 rose 1.4 percent.

The price of West Texas Intermediate crude oil, the US benchmark, fell 3.1 percent to about $83 a barrel on Tuesday. The price of Brent crude, the global benchmark, fell 1.7 percent to $90 a barrel.

In currency markets, the pound fell 0.2 percent against the dollar to $1.13. The yen, which fell to its weakest level since July 1990 on Monday, gained 0.1 percent against the dollar.