Wall Street kicked-off the month of February on bullish note Monday as muted market volatility and steady Treasury bond yields helped extend a three-day rally in tech stocks.
Updated at 4:52 pm EST
U.S. stocks ended firmly higher Tuesday, following on from a wild January ride that provided the best two-day rebound for tech stocks in two years and the weakest monthly performance for the S&P 500 in more than a decade.
Markets remain gripped by the wholesale re-pricing of assets amid the Federal Reserve’s hawkish turn on inflation, which could trigger between four and five rate hikes this year, slowing corporate profit growth and a broader weakening in the global economic recovery.
The CME Group’s FedWatch tool is pricing in a 100% chance of a March rate hike, with the balance of bets resting on an increase that would take the benchmark Fed Funds rate to a range of 0.25% to 0.5%.
At least two of those concerns will come into focus today with a key reading of January economic activity in the world’s largest economy — the ISM manufacturing index, that fell to the lowest level since November of 2020 — and a duo of tech-related earnings after the bell from Google parent Alphabet (GOOGL) – Get Alphabet Inc. Class A Report and chipmaker Advanced Micro Devices (AMD) – Get Advanced Micro Devices, Inc. Report.
Collective S&P 500 profits are expected to grow 25.2% to a share-weighted $441.3 billion. However, based on forward projections and corporate outlooks, that growth rate will slow to just 6.8% over the three months ending in March.
The CBOE Group’s benchmark volatility gauge, the Vix (undefined) , has fallen nearly 27% from the one-year peak it scaled last week, while a modest pullback in Treasury bond yields has provided some stability in markets on Wall Street heading into the start of February.
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On Wall Street, the Dow Jones Industrial Average closed 274 points higher on the session while the S&P 500 gained 31 points to extend its best two-day gain since April of 2020. The tech-focused Nasdaq Composite was marked 106 points higher as benchmark 10-year Treasury note yields held at 1.793%
AT&T (T) – Get AT&T Inc. Report shares were the notable mover Tuesday, falling 4.24% to $24.42 each after it opted for a spin-off of its WarnerMedia assets as part of its media asset merger with Discovery DISCA while slashing its annual dividend payout by around $7 billion.
United Parcel Service (UPS) – Get United Parcel Service, Inc. Class B Report shares were also active, rising 14.1% to $230.69 each after the package delivery giant posted stronger-than-expected fourth quarter earnings, while boosting its planned dividend, as rebound in global traffic lifted the group’s top and bottom line.
Exxon Mobil (XOM) – Get Exxon Mobil Corporation Report, meanwhile, jumped 6.4% following better-than-expected fourth quarter earnings, and a new $10 billion share buyback, as surging global oil and gas prices helped deliver the strongest group profits in seven years.
AMC Entertainment (AMC) – Get AMC Entertainment Holdings, Inc. Class A Report shares surged nearly 5% after the world’s largest cinema chain posted preliminary fourth quarter earnings that could confirm its aim to return to profit over the final months of the year.
In overseas markets, Europe’s Stoxx 600 closed 1.28% higher in Frankfurt, thanks in a part to the strongest reading of January factory activity in the region for at least five months.
Asia’s MSCI ex-Japan index rode the wave of buying on Wall Street last night to a solid 0.31% gain, while the Nikkei 225 in Tokyo closed 0.28% higher at 27,078.48 points.
