Wall Street Rises, Driven by Technical Rebound

  • Baker Hughes falls on missing fourth quarter earnings estimates
  • Activist investor Elliott Management takes a stake in Salesforce
  • Chips on track for biggest daily gain since Nov
  • Indexes up: Dow 0.98%, S&P 1.41%, Nasdaq 2.09%,

NEW YORK, Jan. 23 (Reuters) – Wall Street rose Monday, led higher by technology stocks as investors began a week of earnings with renewed enthusiasm for market-leading momentum stocks that had been battered last year.

All three major stock indices extended Friday’s rally, gaining momentum as the day progressed. The tech-heavy Nasdaq led the way, boosted by a 4.9% rise in semiconductor stocks (.SOX).

“This is a remarkable rally for many of the names that underperformed last year,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. “Nobody wants to watch from the sidelines with a bunch of money as the market moves away from them.”

The session marks the calm before the storm in a week packed with high-profile earnings reports and back-end packed with crucial economic data.

Investors are almost certain that the Federal Reserve will make a bite-sized rate hike next week, even as the US central bank remains determined to tame the hottest inflation cycle in decades.

According to CME’s FedWatch tool, financial markets have priced in a 99.8% probability of a 25 basis point hike in the Fed funds’ benchmark rate by the end of Wednesday’s two-day monetary policy meeting.

The Dow Jones Industrial Average (.DJI) rose 328.17 points, or 0.98%, to 33,703.66, the S&P 500 (.SPX) gained 55.93 points, or 1.41%, to 4,028.54 and the Nasdaq Composite (.IXIC) added 232.84 points, or 2.09% to 11,373.28.

All 11 major sectors in the S&P 500 were higher, with technology (.SPLRCT) rising the most, up 2.8%.

The fourth-quarter reporting season has gained momentum, with 57 of the companies in the S&P 500 reporting results. Of those, 63% have delivered better-than-expected revenues, according to Refinitiv.

Analysts are now seeing S&P 500 earnings fall 3% year over year overall in the fourth quarter, nearly twice as much as the year-on-year decline of 1.6% at the start of the year, according to Refinitiv.

This week, Microsoft Corp (MSFT.O) and Tesla Inc , along with a wave of heavy industrial companies including Boeing CO (BA.N), 3M Co (MMM.N), Union Pacific Corp (UNP.N) Dow Inc (DOW.N), Northrop Grumman Corp. (NOC.N), are expected to report quarterly results.

Tesla Inc (TSLA.O) rose 7.8% as Chief Executive Elon Musk took the stand in his fraud lawsuit related to a tweet saying he had support to take the electric automaker private.

Baker Hughes Co (BKR.O) missed quarterly earnings estimates due to inflationary pressures and ongoing disruptions from Russia’s war against Ukraine. Shares of the oilfield services company fell 0.9%.

Cloud-based software company Salesforce Inc (CRM.N) rose 3.1% on news that activist investor Elliot Management Corp. has taken a multibillion-dollar stake in the company.

Spotify Technology SA (SPOT.N) joined the growing roster of tech-related companies to announce the impending job cuts, shedding 6% of its workforce as rising interest rates and the looming possibility of a recession continue to weigh on growth stocks set. Shares of the music streaming company rose 2.1%.

On the economic front, the Commerce Department is expected to announce its first “advance” on fourth-quarter GDP on Thursday, which analysts expect to come in at 2.5%.

On Friday, the Comprehensive Personal Consumption Expenditure (PCE) report will shed light on consumer spending, income growth and, crucially, inflation.

Emerging issues outnumbered declining issues on the NYSE by a ratio of 3.53 to 1; on Nasdaq, a ratio of 1.95 to 1 was in favor of progress.

The S&P 500 posted 11 new highs in 52 weeks and no new lows; the Nasdaq Composite recorded 66 new highs and 14 new lows.

Reporting by Stephen Culp; Additional reporting by Shreyashi Sanyal and Johann M Cherian in Bengaluru Edited by Marguerita Choy

Our Standards: The Thomson Reuters Principles of Trust.

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