Los Angeles Times

Stocks rise after solid earnings reports

Data on durable goods orders and services sector also put traders in a buying mood.

- By Damian J. Troise and Alex Veiga Troise and Veiga write for the Associated Press.

Stocks on Wall Street closed broadly higher Wednesday as investors welcomed encouragin­g economic data and quarterly earnings reports from big companies including Starbucks.

The Standard & Poor’s 500 rose 1.6% to an almost two-month high, while the Nasdaq composite index gained 2.6%. Both indexes more than recouped losses earlier in the week. The Dow Jones industrial average rose 1.3% and the Russell 2000 index of smaller companies ended 1.4% higher.

Technology companies, retailers and communicat­ions companies were some of the biggest winners. Only energy sector stocks fell, dragged down by lower oil prices.

Investors cheered a report on the services sector, which makes up the bulk of the U.S. economy. The sector grew faster than expected in July, according to the Institute for Supply Management. A separate report showed U.S. orders for big-ticket, durable goods increased more than expected in June.

Some weak recent data on the economy heightened speculatio­n that the peak for inflation and for the Federal Reserve’s aggressive rate hikes may be approachin­g or has already passed. The weak data, though, also show the risk of a recession as the Fed puts the brakes on the economy.

That’s why Wednesday’s more positive economic reports helped put traders in a buying mood.

“That just provides people with more evidence that this economy is hanging in there,” said Jeff Buchbinder, equity strategist for LPL Financial. “At this point, we have a combinatio­n of evidence that inflation is coming down.”

The S&P 500 rose 63.98 points to 4,155.17. It had been down nearly 1% for the week heading into Wednesday. It’s now up 0.6% for the week.

The Dow advanced 416.33 points to 32,812.50. The Nasdaq added 319.40 points to end at 12,668.16. The Russell 2000 picked up 26.48 points, closing at 1,908.93.

The yield on the 10-year Treasury fell to 2.71% from 2.73% late Tuesday.

The S&P 500’s bumpy start this week follows its best month since late 2020. July was a rare winning stretch for the market, which has struggled this year under worries about inflation and rising interest rates.

Earnings remain in focus this week as investors parse the latest results and statements from companies to better understand how inflation is affecting businesses and consumers.

Drugstore chain CVS rose 6.3% after reporting solid financial results and raising its profit forecast for the year. Starbucks rose 4.3% after also reporting solid financial results. Nearly three-quarters of companies within the benchmark S&P 500 have reported earnings for the latest quarter, and the results have mostly beaten analysts’ forecasts.

Several companies, though, have slipped amid disappoint­ing results. Taco Bell owner Yum Brands fell 1.9% after a weak earnings report, and online dating company Match Group tumbled 17.6% after giving investors a weak financial forecast.

PayPal jumped 9.2% on a report that activist investor Elliott Management has taken a large stake in the payment company.

Robinhood Markets, whose stock trading app helped bring a new generation of investors to the market, rose 11.7% after an announceme­nt that it’s cutting nearly a quarter of its workforce. Crashing cryptocurr­ency prices and a turbulent stock market have kept more customers off its app.

Oil prices fell after the decision by the Organizati­on of the Petroleum Exporting Countries to boost production in September at a much slower pace than in previous months. U.S. crude oil fell 4% to settle at $90.66 per barrel; Brent crude, the internatio­nal standard, settled 3.7% lower at $96.78 per barrel.

The pullback in oil prices weighed on energy sector stocks. Hess fell 3.6%

Markets are also watching for potential economic fallout from China after House Speaker Nancy Pelosi’s (D-San Francisco) visit to Taiwan. China, which claims self-ruled Taiwan as part of its territory, banned imports of Taiwanese citrus fruits and frozen fish in retaliatio­n for Pelosi’s visit. But it has avoided disrupting the flow of computer chips and other industrial goods, a step that could jolt the global economy.

Upcoming data on the job market could help investors determine how the Federal Reserve will move ahead with its interest rate policy, which has been aggressive in an effort tame inflation. U.S. jobless claims numbers for last week will be released Thursday, and the government will issue its July jobs report on Friday.

“Expectatio­ns for Fed rate hikes maybe got a little bit too aggressive,” Buchbinder said. “We don’t know if we get a pause by year end, but there’s a decent chance we get a signal for a pause by year end.”

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