Stocks, Bond Yields, Energy Prices Advance In U.S. and Europe

Barry Adams
24 Aug, 2022
New York City

U.S. and European stocks rebounded for the second day in a row and looked beyond the Fed's rhetoric, slowing worldwide economic activities and rising energy prices. 

Crude oil and natural gas trading dominated the sentiment in stock markets as several regions around the world experienced record heat waves. 

Futures of crude oil increased $1.59 to $95.34 a barrel and natural gas rose 5 cents to $9.23 a thermal unit. 

 

Fed Steps Up Campaign, Yields Rise 

The U.S. treasury bond yields rose for the third day in a row and traded above 3% on the expectations that the Fed officials will reiterate their commitment in lowering inflation 

The four-decade high inflation is largely driven by the surge in demand driven by the central bank's excessive money printing in the last two years, the supply disruptions rooted in the China-lockdowns and the surge in energy prices after Russia's invasion of Ukraine. 

The yield on 10-year Treasury notes edged up to 3.105% and two-year notes rose to 3.39%. 

 

Cruise Line Operators Float Higher 

Cruise lines were in favor and Carnival Corp gained 5.4%, Royal Caribbean advanced 7.7%, and Norwegian Cruise floated higher 8.4%. 

Financial services providers and real estate companies also led the gainers. 

Benchmark indexes opened lower but after thirty minutes of trading on Wall Street passed the flat-line on the sustained buying in energy stocks. 

The indexes continued to advance despite the weakness in tech stocks but the rise in financials and REITs sustained the market advance. 

The late morning rally in tech stocks faltered by the early afternoon but the rise in broader market helped the Nasdaq rebound in the final hour of the session.  

The S&P 500 index increased 0.3% to 4,140.77 and the Nasdaq Composite index advanced 0.4% to 12,431.53. 

 

Movers: Advance Auto Parts, Brinker International, Nordstrom, Petco

Advance Auto Parts Inc dropped 9.7% to $179.91 after the retailer said second quarter net sales increased 0.6% to $2.7 billion and comparable sales fell 0.6% from a year ago. 

Net income declined to $144.4 million or $2.39 a share from $178.7 million or $2.76 a share a year ago. 

The auto parts retailer said higher gasoline prices impacted negatively the demand in the quarter from its do-it-yourself customers.  

Brinker International, Inc declined 4.9% to $28.82 after the restaurant chain operator said total revenues increased 12.9% to $1.02 billion but company sales declined 3.5% to $987 million. 

Net income declined to $40 million or 90 cents from $75 million or $1.58 a share a year ago. 

Farfetch Ltd soared 21.3% to $9.51 after the company agreed to acquire 47.5% stake in the online retailer YNAP from Switzerland based Richemont in exchange of 50 million of its shares. 

Nordstrom, Inc plunged 19.9% to $18.56 after the retailer reported second quarter sales increased 12% to $4.1 billion from $3.7 billion a year ago. 

Net income rose to $126 million or 77 cents from $89 million or 49 cents a share. 

The retailer lowered its annual sales outlook to an increase between 5% and 7% compared to 6% and 8% rise in the previous estimate.   

Petco Health and Wellness Company declined 8.8% to $14.34 after the retailer reported weaker-than-expected quarterly results and lowered its full-year outlook. 

 

Europe Look Beyond Energy and Economic Worries 

Benchmark indexes in Europe closed higher and investors reacted to local economic and corporate news. 

Traders also looked ahead to comments from the U.S. Fed Chair Jerome Powell on Friday and anticipated hawkish tone in cooling inflation. 

Moreover, the U.S. Fed officials stepped up inflation rhetoric ahead of Powell's comments.

Federal Reserve Bank of Minneapolis President Neel Kashkari said Tuesday that the inflation is much more entrenched and at a higher level in the economy and  the central been needs to be more aggressive in bringing it under control. 

In the region's news, Iceland lifted its lending rate again, Poland's jobless rate was steady in July and consumer confidence in the euro zone rebounded slightly. 

Iceland's central bank lifted its key lending rate for the fourth time this year. 

The 7-day term deposit rate by 75 basis points to 5.5%, the level last seen in May 2017. 

Poland's jobless rate in July was stable at 4.9%, the nation's statistical office reported Tuesday. 

Consumer confidence in the euro zone recovered to -24.9 in August from the record low of 27.0 in July, according to the flash estimate released by the European Commission on Tuesday. 

The DAX index increased 0.2% to 13,220.06, the CAC-40 index rose 0.4% to 6,386.76, and the FTSE 100 index fell 0.2% to 7,471.51. 

Resource stocks closed lower despite the rise in energy prices in the region. 

Brent crude oil traded above $100 a barrel mark and natural gas futures for October delivery rose 8.2% to 295.85 euros per megawatt hour. 

Rising real estate industry woes in China knocked down Antofagasta, Glencore and ArcelorMittal between 1% and 2%.

CTS Eventim AG rose 2.5% to 55.50 euros after the event ticketing and live event management company reported revenues surged in the first-half and the second quarter revenues surpassed the previous high in 2019. 

Revenues jumped to 734.4 million euros in the first-half 2022 compared to 65.3 million euros a year ago and higher than 696.6 million euros in the first-half of 2019 

Revenue in the second quarter increased to 595.1 million euros from 45.7 million euros a year ago and 413.9 million in the comparable quarter in 2019.

Lookers PLC surged 11.2% to 83.40 pence after the auto dealer reported first-half sales increased to 2.23 billion pounds from 2.15 billion pounds a year ago. 

New vehicle sales in the period declined 5.6% to 970 million pounds and used vehicle sales rose 16.7% to 1.2 billion pounds.

"Trading during July and August has been in line with expectations. Margins remain at H1 levels and the Group continues to maintain a strong order book for the remainder of 2022," guided the company in the trading update. 

Skanska AB declined 0.7% to 160.65 after the Swedish engineering company signed a contract with the U.K. National Highway to upgrade a 6.6 km road of the A46 Newark Bypass in the Midlands.