NEW YORK (AP) – United States (US) stocks rose on Wednesday following better-than-expected profit reports from Morgan Stanley, United Airlines and other big companies.
The S&P 500 gained 0.5 per cent to recover much of the slide from its all-time high the day before because of tumbling energy and technology stocks.
The Dow Jones Industrial Average rose 337 points, or 0.8 per cent, to set its own record, and the Nasdaq composite added 0.3 per cent.
Morgan Stanley rallied 6.4 per cent after reporting stronger profit for the latest quarter than analysts expected.
CEO Ted Pick said the investment bank enjoyed a “constructive environment” in its businesses around the world. And with stock prices near records, it’s managing even more money for clients.
United Airlines flew 12.4 per cent higher after reporting a milder drop in summer profit than expected and announcing plans to send up to USD1.5 billion to its shareholders by buying back its stock. JB Hunt Transport Services motored up by 3.1 per cent after the freight company delivered better-than-expected results.
They helped offset a 2.5 per cent drop for Citizens Financial Group, which reported weaker results for the latest quarter than analysts expected.
Energy stocks were holding steadier, including a 0.3 per cent tick higher for Exxon Mobil, a day after sliding to some of the market’s worst losses.
US technology stocks were also holding up better a day after a market-shaking warning from ASML, a Dutch supplier to the chip industry.
ASML CEO Christophe Fouquet said on Tuesday that artificial intelligence continues to offer strong upside potential, but “other market segments are taking longer to recover”. That helped lead to slides of 3.5 per cent for Broadcom and 4.7 per cent for Nvidia on Tuesday.
A day afterward, both rose, and Nvidia’s gain of 3.1 per cent was the strongest single force pushing upward on the S&P 500.
Still, Wednesday offered the first chance for Asian stock markets to feel the ripples of ASML’s warning, and chip companies there tumbled.
Japan’s Nikkei 225 fell 1.8 per cent as chip maker Tokyo Electron sank 9.2 per cent and Lasertec Corp, which makes equipment to inspect chips, lost 13.4 per cent.
Stock indexes were mixed across the rest of Asia and Europe. In London, the FTSE 100 rose one per cent after the government reported United Kingdom (UK) inflation eased in September to its lowest level in more than three years.
That reinforced expectations that the Bank of England will cut interest rates at its next policy meeting.
In the US, the Federal Reserve (Fed) has also already begun cutting interest rates following years of keeping them high in hopes of slowing the economy enough to stifle high inflation.
With inflation finally seeming to be heading toward the Fed’s two per cent target, the central bank is widening its focus to include keeping the economy humming.
Recent reports showing the US economy remains stronger than expected have raised optimism that the Fed can pull off a perfect landing where it gets inflation down without causing a recession that many had thought would be necessary.
Such optimism, along with hopes for increased stimulus for China’s flagging economy, caused the biggest jump in global growth expectations since May 2020 in a survey of global fund managers by Bank of America. The survey also showed the biggest jump in investor optimism since June 2020.
Stocks of smaller companies led the way on Wednesday, an indication that investors are seeing solid growth for the US economy ahead. The Russell 2000 index of smaller stocks jumped 1.6 per cent.
The S&P 500 rose 27.21 points to 5,842.47. The Dow gained 337.28 to 43,077.70, and the Nasdaq composite added 51.49 to 18,367.08.
In the bond market, the yield on the 10-year Treasury fell to 4.01 per cent from 4.03 per cent late Tuesday. The two-year yield, which more closely tracks expectations for what the Fed will do, slipped to 3.93 per cent from 3.95 per cent.
