Wall Street closed higher on Wednesday with the tech-heavy Nasdaq booking a nearly 2% gain on positive earnings signals with a wary eye on inflation and more interest rate hikes by the Fed.
Netflix Inc’s shares jumped after the company predicted it would return to customer growth during the third quarter, while posting a smaller-than-expected 1 million drop in subscribers in the second quarter.
Other high-growth stocks extended gains following the forecast from the streaming service provider, including shares of Apple Inc, Amazon.com Inc, Microsoft Corp and Meta Platforms Inc.
Electric vehicle maker Tesla Inc added 0.6% ahead of its earnings report after market close.
“Equity prices are trending in a roller coaster fashion, currently being at the mercy of inflation, interest rates and earnings,” said Terry Sandven, chief equity strategist at US Bank Wealth Management. “We’re going to need another series of reporting cycles to confirm whether or not inflation indeed is getting under control.”
Analysts expect aggregate year-on-year S&P 500 profit to grow 5.9% in this reporting season, down from the 6.8% estimate at the start of the quarter, according to Refinitiv data.
Runaway inflation initially led markets to price in a full 100-basis-point hike in interest rates at the Fed’s upcoming meeting next week, until some policymakers signaled a 75-basis-point increase.
According to preliminary data, the S&P 500 gained 22.89 points, or 0.58%, to end at 3,959.58 points, while the Nasdaq Composite gained 185.15 points, or 1.58%, to 11,898.30.
The Dow Jones Industrial Average rose 44.10 points, or 0.14%, to 31,871.15.
Trading remained volatile in thin volumes, with the CBOE Volatility index last down 23.71 points to its lowest in nearly three months.
“Low volumes accentuate market moves historically and even though we’ve wiped off $10 or $15 trillion from global equities this year, there’s still a lot of excess liquidity. So low volume on excess liquidity can still accentuate moves,” John Lynch, chief investment officer for Comerica Wealth Management, said.
Health insurer Elevance Health Inc plunged as the largest S&P percentage loser, as the company’s medical costs failed to decrease in line with rival United Health Group Inc.
Baker Hughes Co tumbled as the oilfield services provider reported a bigger second-quarter loss, while its adjusted profit also missed estimates.