Investors remained focused on the Federal Reserve’s monetary policy direction, which also drove Treasury rates up. Two hundred thirty points have been added to the Dow Jones DJIA +1.29 percent, and the Nasdaq Composite COMP +2.50 percent have each gained 0.8 percent, while the S&P 500 SPX +1.57% have each earned 0.8 percentage points. Soon after the market began, these gains occurred.
After Pelosi departed from Taiwan, stocks were “trading cautiously higher this morning,” according to Tom Essaye of The Sevens Report.
The pan-European Stoxx 600 index rose by 0.4%, while the Hang Seng Index in Hong Kong rose by 0.4%.
House Speaker Nancy Pelosi (D., Calif.) arrived on her historic visit to Taiwan, an island at the center of the global chip-making sector that China claims as its own. After China’s response, China has prepared for some of the crucial exercises surrounding Taiwan for more than 30 years.
Even though markets fell on Tuesday, they seemed ready for a little bounce the following day when Pelosi departed Taiwan, and China did not take any immediate military action.
According to an analyst at Exinity, “Risk assets are trying to shake off the recent surge in US-China tensions, with U.S. futures seeming to have regained more stable footing after a rocky start to August.”
Geopolitical concerns provide a reprieve from the primary macro reasons driving markets recently—inflation at a four-decade high and the possibility of recession from the Federal Reserve’s decision to battle red-hot prices with much tighter monetary policy.
The Fed’s rate-hike plan remained a hot topic, though, as Treasury rates in the United States rose. After four rate increases this year, including two 75-basis-point increases in June and July—the largest since 1994—the central bank expects to continue raising rates as it reins in inflation.
Yields on the standard 10-year Treasury note soared above 2.7% on Tuesday and were at 2.79 percent on Wednesday.
As Deutsche Bank strategist Jim Reid points out, “10-year U.S. yields had already climbed ten basis points before Speaker Pelosi’s safe landing, mostly in the hour or so before the plane landed on comments from San Fran Fed President Daly who said the Fed’s work was ‘nowhere near’ done on fighting inflation.” The move was the fourth-largest in five years as investors are “still seeing big volatility in markets,” Reid notes. ”
Investors now look forward to Friday’s employment statistics from the Bureau of Labor Statistics (BLS) to determine whether the labor market slowed in July. On Tuesday, the Bureau of Labor Statistics issued its Job Openings and Turnover Summary, which indicated that 10,7 million positions were available in June, the lowest number since September 2021. That might suggest that the sweltering job market is about to cool.
Evercore ISI analyst Julian Emanuel said, “Tuesday’s JOLTS Job Openings data dropped more than anticipated in June to a nine-month low.” Although recent layoff and hiring stop announcements have been high-profile, this is consistent with previous signals of a cooling job market.
“It’s a little bit of a bad news is good news type market scenario right now where we need to be seeing some negative news on the economy or some weakening of the economy to keep sending equities higher,” said Raymond James analyst Tavis McCourt on Wednesday.
Jobs will expand, although at a lesser rate than previously expected. McCourt added that stocks would react if there were a significant divergence from that assumption. Rates will rise, and markets will fall if that employment figure is higher.” “Rates will go down, and equities will rise if the employment data is lower,” he says.
As the week progresses, more corporations are reporting quarterly profits. “Much better than expected” is how McCourt described the company’s gains so far.
On Wednesday, Shares of Match Group (MTCH) plummeted 22% after poor second-quarter earnings and an outlook that fell short of expectations from Wall Street. The firm also announced that Tinder CEO Renate Nyborg is resigning.
In a reversal of recent losses, Robinhood Markets HOOD +12.68 percent (HOOD) gained 5 percent. Trading platform CME Group stated Tuesday that it would slash 23 percent of its personnel due to a downturn in market activity. According to the group’s second-quarter financial statistics, it lost 34 cents per share as its monthly active users declined by 1.9 million from the first quarter’s total of 14 million to 14 million.
Even though MicroStrategy MSTR +14.19 percent (MSTR) CEO Michael Saylor, a high-profile crypto bull, stated that he would step down and take an executive chair position, the company’s shares surged 4.5 percent. In the sIn the second quarter, the company posted a $1.1 billion loss due to a $918 million Bitcoin-sized hole in the company’s balance sheet.
Despite second-quarter earnings and revenue hitting, shares in Bayerische Motoren Werke (BMW.Germany) fell 6.2 percent in Frankfurt trading after the automaker decided to lower its full-year delivery forecast.
The price of Moderna (MRNA) rose 8%. On Wednesday, the Covid-19 vaccine maker reported better-than-expected earnings and sales.
That is the first time this fiscal year that Starbucks (SBUX) has been ahead of earnings forecasts for a quarter of this fiscal year. On Wednesday, the company’s shares rose 1.2 percent.
Stocks rose on Wednesday, at least for a day, as geopolitical concerns over Taiwan eased.
In Wednesday’s premarket session, several of these stocks made gains or losses.
AMD –2.33 percent (ticker: AMD) fell 3.5 percent as the chipmaker announced a lower-than-expected third-quarter revenue outlook due to a decline in demand for personal computers.
Following the company’s earnings announcement, above analyst estimates, and a $15 billion share repurchase authorization, PayPal PYPL +9.41% (PYPL) is up 12%.
MicroStrategy (MSTR) stock rose 5.4% after CEO Michael Saylor announced his intention to step down next week, following his second-quarter earnings report that showed a net loss of $1.06 billion, which included $918 million in losses due to its Bitcoin investments.
It had climbed 7.6% after Moderna reported better-than-expected second-quarter earnings and announced a new $3 billion share repurchase plan, Moderna MRNA +16.64% (MRNA).
SBUX rose 1.2 percent after reporting third-quarter financial results that beat Wall Street’s expectations. The sale of soft drinks and food was cited as a success factor for the company. In June, it endorsed the stock, saying its actions reflected the worst inflationary impact on its earnings. The stock had risen 13% since the choice was made on June 23, when it was first released.
Analysts’ expectations for second-quarter booking growth were missed by Airbnb (ABNB) by 4%.
For the second quarter, CVS Health (CVS) beat earnings expectations and raised its full-year outlook, resulting in a 4.3% rise in its share price.
When Under Armor (UAA) reported 3 cents a share on sales of $1.35 billion, the company missed analyst forecasts by $1.34 billion; shares rose 3.4%. The company lowered its earnings forecast for fiscal 2023, citing more product advertising and a stronger currency. Earlier this year, analysts endorsed the stock, saying the company’s decision to focus on fewer goods should help it boost its profit margin. Since the suggestion, the share price has dropped 38%.
After a quarterly loss of 11 cents per share, Match Group’s (MTCH) stock fell 21% as the company reported revenue of $795 million, far below expectations of $804 million. In its midpoint forecast, the company expects revenues of $795 million, representing no gain over the previous year.
Shares in an electric car and battery systems maker Proterra (PTRA) jumped 5.3 percent after the company reported a loss of 18 cents a share, less than forecasts for a 38-cent loss on U.S. revenue. $74.6 million, above expectations of $70.3 million. According to analysts, increasing the use of electric cars will help Proterra, which was suggested in January this year. However, since the January 7 recommendation, the stock has fallen 36%.
After the deal posted earnings of $1.93 per share, beating projections of $1.88, with revenues of $1.45 billion above expectations, FMC (FMC) shares rose 0.1 % in negotiations. To offset the rising expenses, the company raised farmers’ prices of its pesticide products. According to analysts, FMC will raise prices to cover its costs in March. Since the March 10 call, the stock has risen 12%.