US stocks rose Monday to kick off an important week as Wall Street awaits gains from some of the biggest players in the market.
The S&P 500 (^GSPC) climbed about 1.2% while the Dow Jones Industrial Average (^DJI) rose more than 400 points, or about 1.3%. The tech-heavy Nasdaq Composite (^IXIC) rose 0.9% after starting the day in the red.
US Treasury yields rose Monday after a relentless climb last week, with the 10-year bond temporarily reaching a 14-year high above 4.3%.
On Friday, the Wall Street Journal reported that some Federal Reserve officials were concerned about the pace of rate hikes ahead of their November meeting, leading stocks rallying to close out a winning week.
Mary Daly, president of the San Francisco Federal Reserve, also said the central bank must prevent the economy from entering an “unforced downturn” and that it is time to consider slowing the pace of rate hikes.
“I think that’s the wrong message,” Interactive Brokers chairman and founder Thomas Peterffy told Yahoo Finance Live on Friday after Daly’s comments. “I think the Fed should send the message that we are going to stamp out inflation no matter what. And they are in a better position if they can scare the market into moderating spending rather than force them to ease it.”
Monday’s data also showed that the central bank’s tightening policies are beginning to weigh on US business activity, with the purchasing managers index pointing to weakness in both the services and manufacturing sectors of the economy.
The upside on Wall Street comes as investors await earnings from the top five tech companies — Microsoft (MSFT), Alphabet (GOOGL), Meta Platforms (FB), Apple (AAPL), and Amazon (AMZN) — which alone have about a half a million dollars. quarter of the market capitalization of the S&P 500 index.
Historically, when these four companies reported in the same trading week, Alphabet (GOOG) was the only one to consistently see its stock reacting positively to earnings, while the rest all tended to decline. These past events were over. quarter the first time all four of these stocks traded higher in response to earnings,” wrote Jake Gordon, an analyst at Bespoke Investments Group.
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Third quarter results have been better than expected so far, with beats from companies like Netflix (NFLX), AT&T (T) and IBM (IBM) countering the misses of companies like Snap (SNAP), which fell 28% on Friday. fell after a setback results.
Data from FactSet shows that S&P 500 companies that failed to live up to expectations this earnings season fell 4.7% on average in the two days before their report through the two days after, compared to the five-year average of 2.2 %.
Still, investor expectations are relatively lower than usual.
“Earnings expectations, if you exclude the energy sector, went from about 6% in July for this quarter’s earnings, all the way down to… negative 3%,” BMO Wealth Management Chief Investment Strategist Yung-Yu Ma told Yahoo Finance Live on Friday. “And once you set the bar that low, you create an environment where it’s a lot easier to beat the win, a lot easier to hold auxiliary rallies.”
The strength of the US dollar has weighed heavily on corporate earnings. Against the Chinese yuan, the dollar gained on Monday and weakened. In European markets, the pound traded stronger as UK government bonds rose after Boris Johnson pulled out of the race for prime minister, bringing former chancellor Rishi Sunak closer to the next prime minister.
Chinese stocks also had their worst day since 2008 and US-listed Chinese stocks Alibaba (BABA) and JD.com Inc. (JD) plummeted Monday as President Xi Jinping embarked on a precedent-breaking third term in control of the ruling Communist Party.
The news hit other stocks with exposure to China. Shares of Tesla (TSLA) fell 4% after the automaker slashed prices for its vehicles sold in China as the company faces stiff competition from local rivals in its second-largest market.
Elsewhere, crypto traded as Bitcoin moved to the $19,000 level, while Ethereum pulled back as their supply appears to be declining since the merger.
“Bitcoin is stuck around the $19,000 level and will likely stay that way until we get past next week’s FOMC policy meeting,” wrote Edward Moya, senior analyst at OANDA.
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Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
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