Wall Street climbs, shaking off weak earnings reports

By Damian J. Troise

Stocks rose in afternoon trading on Wall Street Monday, gaining more ground following the market’s first weekly increase in five weeks as investors await fresh inflation data out later this week.

The S&P 500 rose 1.2 per cent in afternoon trading in the US. The Dow Jones Industrial Average rose 223 points, or 0.7 per cent, to 33,854 and the Nasdaq rose 2.1 per cent.

Technology stocks were doing especially well. Apple jumped 2.5 per cent. Energy stocks rose as crude oil prices added 1.6 per cent. Marathon Oil rose climbed 1.9 per cent.

Wall Street was trading up ahead of its close later this morning Australian time.
Wall Street was trading up ahead of its close later this morning Australian time. Credit:AP

The broader gains come amid several disappointing financial updates from retailers dealing with weaker sales and profit margins as inflation dents consumer spending. Macy’s shed 7 per cent and Lululemon Athletica fell 8.8 per cent after issuing cautious outlooks.

The latest corporate earnings are starting to trickle in as investors try to get a better sense of inflation’s ongoing impact on consumers and businesses. Several big companies will report their results later this week, including Bank of America, JPMorgan Chase and UnitedHealth.

The big focus for investors remains how inflation and its impact on the economy will affect the Federal Reserve’s plan to continue raising interest rates. The central bank is trying to make borrowing more difficult and slow the economy to tame inflation, but it risks going too far and bringing on a recession.

Government reports last week showed that the employment market remains resilient. While that’s good for the economy, it also makes the Fed’s job more difficult by putting upward pressure on wages. Investors were encouraged by some of the data that showed wage growth may be tempering.

Wall Street will get another update on inflation Thursday when the government releases its report on consumer prices for December.

Inflation has been generally cooling and the Fed last month trimmed the size of its rate increase to 0.50 percentage points after four straight hikes of 0.75 points. Traders are largely betting on the Fed to move to the more traditional hike of 0.25 points at its meeting next month.


The Fed has pulled its key overnight rate up to a range of 4.25 per cent to 4.50 per cent after it began last year at virtually zero.

Bond yields fell. The yield on the 10-year Treasury slipped to 3.52 per cent from 3.57 per cent late Friday. The yield on the two-year Treasury, which tends to track future action from the Fed, fell to 4.21 per cent from 4.26 per cent late Friday.

Markets in Europe and Asia gained ground. A Chinese financial news outlet cited a top central bank official as saying that China’s more than two-year crackdown on internet companies is nearly finished.

E-commerce giant Alibaba rose 3.5 per cent. Late Friday, Alibaba affiliate and leading Chinese financial technology provider Ant Group announced its founder, e-commerce billionaire Jack Ma, will give up control of the company. The move followed efforts by the Chinese government to rein in Ma and the country’s tech sector more broadly.

Associated Press

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