Stocks Rising After Consecutive Losing Days

US stocks rose on Wednesday, recovering this week’s losses as investors rocketed through the earnings season and weighed in optimistic economic data from the services sector.

The S&P 500 rose 1.6% and the Dow Jones Industrial Average gained 450 points, or about 1.4%. The tech-heavy Nasdaq Composite rose 2.6%.

Bonds also advanced after the aggressive Fedspeak Tuesday, with 10-year Treasury benchmark yields close to 2.8% and 2-year yields above 3.1%.

Economic data released on Wednesday showing the US services sector rebounding in July helped boost sentiment. The ISM Services PMI reached 56.7 percent last month from its June reading of 55.3 as supply chain problems appeared to ease.

Shares of Robinhood (HOOD) rose more than 13%, a day after the brokerage said it would lay off nearly a quarter of its staff and reported its sixth quarterly loss in a row.

Shares of CVS (CVS) gained 5% after the drugstore chain reported gains that exceeded estimates and lifted expectations for the full year.

Shares of Starbucks (SBUX) rose 3% after the coffeehouse announced its fiscal third quarter earnings late Tuesday, which largely beat Wall Street estimates, despite inflationary pressures, labor costs, union efforts and the search for a permanent CEO to support it. quarter clouded.

Meanwhile, shares of AMD (AMD) fell nearly 4% after a chipmaker warned of a worse-than-expected third quarter late Tuesday.

As economic data shows signs of slowing and companies continue to weaken their outlook, analysts are making larger than average cuts in earnings per share estimates for S&P 500 companies for the third quarter. According to data from FactSet, Wall Street lowered its consensus bottom-up EPS estimate from June 30 to July 28 by 2.5%. Over the past five years – or 20 quarters – the average decline in the bottom-up EPS estimate during the first month of a quarter was 1.3%.

The exterior of the Marriner S. Eccles Federal Reserve Board Building is seen in Washington, DC, US, June 14, 2022. REUTERS/Sarah Silbiger

The exterior of the Marriner S. Eccles Federal Reserve Board Building is seen in Washington, DC, US, June 14, 2022. REUTERS/Sarah Silbiger

In commodities markets, OPEC and its allies have given the green light to a small increase of about 100,000 barrels per day in oil production after calls from the US and other major consumers for more supply. The move, while symbolic, is expected to have little impact on prices. Crude fell from a daily high in the afternoon, with WTI (CL=F) just above $92 a barrel and Brent (BZ=F) at around $98.20.

Wednesday’s moves follow a down day on Wall Street, where markets closed lower for a second straight session amid a high-stakes visit by House Speaker Nancy Pelosi to Taiwan, raising concerns about US-U.S. relations. China.

On Tuesday, investors consumed the aggressive Fedspeak that suggested more rate hikes were underway in the central bank’s efforts to curb inflation. Mary Daly, president of the San Francisco Fed, said on Tuesday that policymakers were “resolutely and completely united” in their goal to restore price stability, and Charles Evans, president of the Chicago Fed, told reporters that officials said “at least a few reports” were from seeing enough improvement in inflation data to slow the pace of the rates of increase.

Meanwhile, James Bulllard, president of the St. Louis Federal Reserve, said the US Federal Reserve and European Central Bank could still achieve a “relatively soft landing” as they tighten monetary conditions.

“I think the story for the markets is still, ‘What happens to the Fed? What happens to the tightening?’” Manulife Investment Management Global Macro Strategist Eric Theoret told Yahoo Finance Live on Tuesday. “When it comes to geopolitics, it’s not really an engine for market movements right now.”

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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