Alongside Taiwan tensions and Federal Reserve policy expectations, Wall Street remains focused on corporate earnings this week.
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Stocks rose Wednesday, led by the Nasdaq Composite, after tech earnings came in better-than-expected and economic data improved investor sentiment.
The Dow Jones Industrial Average rose 406 points, or 1.3% by the close, while the S&P 500 added 1.6%, and the Nasdaq surged 2.6%.
Some major stocks in the Nasdaq climbed on Wednesday. Meta Platforms (ticker: META) gained 5.4% on a report that the parent of social media giant Facebook may become the latest tech company to turn to the bond markets in a bid to raise capital. Also, Moderna (MRNA) soared 16% and PayPal Holdings (PYPL) rose 9.3% after earnings for both companies beat analyst estimates.
Raymond James strategist Tavis McCourt said on Wednesday that the institutional investment community was “very bearish heading into earnings season,” but some of the recent tech earnings turned out “not as bad as feared,” which could be a reason why the Nasdaq was spiking.
Wednesday’s market action continued what has been a recent rally for the stock market. The Dow closed up about 9.8% from its 52-week low hit on June 17, while the S&P 500 and the Nasdaq were up 13% and 19%, respectively, from their mid-June lows.
Investor sentiment had wobbled a bit since House Speaker Nancy Pelosi (D., Calif.) arrived on her historic visit to Taiwan—an island at the heart of the global chip-making industry that China considers part of its territory. China responded by planning drills around Taiwan that will be among the most significant in almost 30 years.
Yet after falling on Tuesday, stocks made a rebound as Pelosi left Taiwan and no immediate military action was taken by China.
“The Pelosi visit to Taiwan roiled markets and markets motor higher now that it’s behind us,” wrote Louis Navellier, founder of Navellier and Associates, who called the pullback yesterday a “brief buying opportunity in a market that wants to go higher.”
Better-than-expected economic data released Wednesday also helped to move stocks higher. The ISM nonmanufacturing purchasing managers index rose to a reading of 56.7 in July, from 55.3 in June. Analysts surveyed on FactSet were expecting a reading of 53.5.
Dennis Debusschere, founder of 22V Research, said that the internals of the ISM were consistent “with what we saw with manufacturing and what we’ve seen in supply chain easing.”
“Supplier delivery times improved, prices paid came down a lot. So you have some disinflationary aspects of the ISM at the same time that you had headline stronger,” Debusschere added.
Investors are now looking ahead to Friday’s jobs data from the Bureau of Labor Statistics to see if the labor market cooled at all in July. The Job Openings and Labor Turnover Summary released on Tuesday by the BLS showed that 10.7 million jobs were listed in June, the lowest level since September of 2021. This could be a sign that the red-hot labor market is cooling.
McCourt said on Wednesday that when looking at Friday’s jobs expectations, “it’s a little bit of a bad news is good news type market environment right now where we need to be seeing some bad news on the economy or some weakening of the economy to keep moving stocks higher.”
Here are some stocks that were on the move Wednesday:
Match Group ’s (ticker: MTCH) stock sank 17.6% after the operator of online dating sites such as Tinder reported disappointing second-quarter results and provided guidance that fell short of Wall Street estimates. The company also announced that Tinder Chief Executive Renate Nyborg is leaving the company.
Robinhood Markets (HOOD) gained 11.7%, reversing earlier declines. The retail investor-focused trading platform announced Tuesday that it would cut 23% of its workforce as it deals with a trading slowdown. Releasing its results early, the group revealed a bigger-than-expected second-quarter loss of 34 cents per share, as its monthly active users fell to 14 million, down by 1.9 million from the first quarter.
MicroStrategy (MSTR) stock rose 12.7% even after the software group—which has a significant amount of Bitcoin on its balance sheet—announced its CEO Michael Saylor, a high-profile crypto bull, would step down and into an executive chair role. The company reported a $1.1 billion loss in the second quarter driven by a Bitcoin-sized hole worth some $918 million as a result of crypto price declines.
Starbucks (SBUX) reported quarterly earnings after the close on Tuesday that came in ahead of expectations for the first time this fiscal year. The stock was up 4.3% Wednesday.
SoFi Technologies (SOFI) soared 28.4% Wednesday, a day after the financial services company posted record quarterly revenue and raised guidance for fiscal 2022.
CVS Health (CVS) climbed 6.2% after the retail pharmacy reported earnings that beat Wall Street estimates and raised its full-year guidance for the second quarter in a row.
Ride share company Uber Technologies (UBER) gained 3.2% after receiving an upgrade from an analyst from Raymond James, who was positive on the company’s recent earnings results.
Write to Jack Denton at jack.denton@dowjones.com and Angela Palumbo at angela.palumbo@dowjones.com
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