Wall St. rebounds on tech strength, eyes shift to earnings
(Reuters) – U.S. stocks rebounded on Thursday from a steep selloff in the prior session, boosted by technology shares, as investors shrugged off a cautious outlook from the Federal Reserve on interest rate cuts and focused on corporate earnings.
The U.S. central bank reduced borrowing costs by a widely-expected quarter of a percentage point on Wednesday, but Fed Chairman Jerome Powell signaled a series of further cuts was unlikely, leading to a sharp selloff on the S&P 500 and Dow.
Despite that, all three major indexes posted their second straight monthly gains in July, closing the book on a month in which the S&P 500 and the Nasdaq reached fresh record highs.
“As people thought about the cut overnight, it really wasn’t such a big change from what they expected. The Fed isn’t going to keep cutting if the economy shows signs of improvement, but they may cut ahead,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.
The two big issues for the markets have been the U.S.-China trade talks and the Fed rate cut, which are now momentarily behind us, Meckler said.
Earnings reports so far have been robust with 355 companies in the S&P 500 that have reported second-quarter earnings, 74.4% have beaten Street estimates for profit, according to Refinitiv data.
The S&P 500 technology sector, Wall Street’s best performer so far this year, rose 2.10%, recovering from a 1.5% drop in the previous session, helped by shares of Microsoft Corp and Apple Inc.
Verizon Communications Inc rose 1.09%, contributing to a 1.22% gain in the communication services sector, after the wireless carrier beat quarterly profit estimates.
The Dow Jones Industrial Average rose 271.77 points, or 1.01%, to 27,136.04 and the S&P 500 gained 29.57 points, or 0.99%, to 3,009.95. The Nasdaq Composite added 122.60 points, or 1.5%, to 8,298.02.
Kellogg Co jumped 8.18% after it beat analysts’ expectations for quarterly sales and profit, driven by higher demand for its snacks in North America.
Qualcomm Inc dropped 0.29% after the chipmaker’s quarterly revenue and profit forecasts missed Wall Street targets.
Among other decliners, the energy sector slid 0.78%, the most among the 11 major S&P sectors, as oil prices declined as rising U.S. output helped keep the market well supplied and on Fed commentary on further rate cuts. [O/R]
Shares of oil major Exxon Mobil Corp dropped 0.63%, ahead of its earnings report on Friday.
Investors awaited the Labor Department’s nonfarm payrolls data to gauge the strength of the domestic labor market. The report is expected to show private payrolls added 164,000 jobs in July, according to a Reuters survey, after surging by 224,000 in June.
Advancing issues outnumbered decliners by a 1.68-to-1 ratio on the NYSE and by a 1.77-to-1 ratio on the Nasdaq.
The S&P index recorded 24 new 52-week highs and five new lows, while the Nasdaq recorded 68 new highs and 60 new lows.
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