October 2, 2022

Stocks & Bonds: Earnings Propel Tech, And Subdue Industrials

The broader market was up more than 2 percent for the week, largely in response to the deal European leaders reached on Greece’s debt on Thursday. For the week, the Dow Jones industrial average was up 1.6 percent. The Standard Poor’s 500-stock index rose 2.1 percent, and the Nasdaq composite was 2.4 percent higher.

On Friday alone, the Dow closed down 43.25 points, or 0.34 percent, at 12,681.16. The S. P. was up 1.22 points to 1,345.02, and the Nasdaq was up 24.40 points, or 0.86 percent, to close at 2,858.83.

Investors were also warily watching the deficit-reduction talks in Washington, where President Obama and the Republican House speaker, John A. Boehner, were trying to shape a deal and avoid a government default in less than two weeks.

Quarterly corporate earnings moved the markets on Friday. Caterpillar, which reported that second-quarter revenue was up 37 percent, said earnings per share were $1.72, slightly below expectations of $1.75, analysts noted. It also reported softening demand in China.

Caterpillar was trading about 5 percent lower through the day and closed down 5.78 percent at $105.15.

“It’s basically cause and effect,” said Lawrence Creatura, portfolio manager at Federated Investors.

Timothy Hoyle, vice president for research at Haverford Investments, said the results “disappointed the market.” But he added: “I think the market might be overreacting.”

Another major industrial company, General Electric, reported results that slightly surpassed Wall Street’s expectations in both profits and sales. G.E. stock fell 0.63 percent to $19.04.

Technology shares did well, helping to bolster the Nasdaq.

SanDisk exceeded expectations in its earnings report late on Thursday. The company said second-quarter revenue was $1.375 billion, up 17 percent from a year ago. It closed up more than 9 percent at $45.57.

Advanced Micro Devices on Thursday reported $1.57 billion revenue and net income of $61 million, or $0.08 a share. It rose more than 19 percent to close at $7.75.

Interest rates were lower. The Treasury’s benchmark 10-year note rose 14/32, to 101 12/32, and the yield fell to 2.96 percent, from 3.01 percent late Thursday.

“Debt deals in Europe, debt deals in the U.S., debt deals at home,” said Kevin H. Giddis, the executive managing director and president for fixed-income capital markets at Morgan Keegan Company, in a research note. “The potential ‘rise and fall’ of these is causing investors to take a more conservative approach on the last day of the week before what might or might not happen over the weekend.”

Financial markets in Europe on Friday continued to give a positive reception to the deal reached in Brussels by European leaders that gave Greece more time to deal with its mountain of debt. Bank stocks in particular benefited, and Greek, Irish and Spanish bonds continued to rally.

In Europe, the package of measures approved by euro zone leaders includes a reduction in interest rates for the two other bailed-out countries, Ireland and Portugal.

The Euro Stoxx 50 index of blue chips opened strongly but gave up some of its gains and ended the day up 0.3 percent. Greek 10-year yields dropped below 16 percent for the first time since June 8, sinking 137 basis points to 15.12 percent, according to Bloomberg News. Irish 10-year yields tumbled 52 basis points to 11.83 percent. Spanish 10-year bond yields fell eight basis points to 5.65 percent while yields on Italian debt of the same maturity declined eight basis points to 5.27 percent.

The euro rose against a number of currencies including the Swiss franc and the pound, but fell slightly against the dollar, to $1.4370. Analysts said a report showing German business confidence declined by more than forecast in July and was holding back stronger gains.

Article source: http://feeds.nytimes.com/click.phdo?i=45fe20e5ba1d364f3026df858765efed

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