[New York Stock Market] "Better-than-expected earnings, has the bottom been reached?" Rally... Nasdaq up 3.11%

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Major indices on the U.S. New York stock market closed higher on the 19th (local time), buoyed by better-than-expected corporate earnings. Investors' growing belief that the prolonged downtrend has bottomed out led the rally on this day.

At the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 31,827.05, up 754.44 points (2.43%) from the previous session. The large-cap-focused S&P 500 index rose 105.84 points (2.76%) to 3,936.69, and the tech-heavy Nasdaq index gained 353.10 points (3.11%) to close at 11,713.15. The three major indices all surpassed their 50-day moving averages for the first time since April.

By sector, all sectors of the S&P 500 advanced. The communication services and industrial sectors led the rally with gains exceeding 3%. Financial stocks showed strength, supported by recent robust earnings. Goldman Sachs Group closed up 5.57% from the previous session. Bank of America (BoA) and Wells Fargo rose 3.38% and 4.15%, respectively. Truist Financial and Citizens Financial Group also gained more than 2%.

Energy stocks rose following the increase in international oil prices. Halliburton closed up 2.11% on earnings that exceeded expectations. Marathon Oil (+4.40%), Chevron (+3.60%), and ExxonMobil (+2.52%) also showed broad gains. Twitter, which secured a court's expedited trial decision in a lawsuit against Tesla CEO Elon Musk over the invalidation of an acquisition contract, rose 2.81%.

IBM fell more than 5% despite better-than-expected earnings, as it lowered its cash flow forecast. Johnson & Johnson also beat earnings expectations but closed down 1.46% after lowering its annual net income forecast due to the strong dollar. Netflix, which is scheduled to release earnings after the market close, ended the regular session up 5.61%.

Investors are closely watching corporate earnings and forecasts amid ongoing recession concerns. As of the morning of this day, about 9% of S&P 500 companies had reported earnings. According to FactSet, two-thirds of those companies disclosed results that exceeded market expectations.

As corporate earnings have held up better than initially feared, market analysis is spreading that the previously declining stock prices may have now bottomed out. Kim Forrest, Chief Investment Officer at Bokeh Capital Partners, said, "Both investors and companies were expecting inflation, so it is not surprising that companies are talking about it. The surprising thing is that they were able to overcome it well."

Ed Yardeni, founder of Yardeni Research, also mentioned in an investor note the previous night that the S&P 500 index may have bottomed out the bear market last month. While this does not mean a new bull market has started, it indicates a phase of gradual recovery supported by bargain hunting after hitting the bottom.

However, advice to keep the possibility of further declines open is also being given. Chris Senyek of Wolfe Research predicted, "Trading will be very volatile with bear market rallies over the next few months."

Concerns remain over cost increases due to inflation, worsening supply chains, and earnings hits to global companies caused by the strong dollar. The recent spread of tightening measures, such as reducing future employment and investment in preparation for a possible recession, especially among tech companies, also contributes to a pessimistic outlook.

In the New York bond market on this day, the yield on the U.S. 10-year Treasury rose to around 3.02%. The 2-year yield, sensitive to monetary policy, also climbed to 3.24%. The inversion of short-term yields exceeding long-term yields continues, which is generally considered a precursor to a recession.

The U.S. Federal Reserve (Fed) is expected to take a giant step by raising the benchmark interest rate by 0.75 percentage points at the upcoming FOMC meeting at the end of this month.

New housing starts in the U.S. decreased for the second consecutive month, signaling a slowdown in the housing market. According to the U.S. Department of Commerce, June housing starts fell 2.0% month-over-month to an annualized rate of 1,559,000 units, below market expectations.

At the New York Mercantile Exchange, the August West Texas Intermediate (WTI) crude oil price closed at $104.22 per barrel, up $1.62 (1.58%) from the previous day.

This content was produced with the assistance of AI translation services.