Stocks Power Ahead Awaiting Earnings

Barry Adams
24 Oct, 2022
New York City

U.S. stocks extended last week's gains as investors await the latest batch of earnings and bond yields stayed near recent 14-year highs. 

Apple, Inc, Alphabet, Amazon and Microsoft are among some 800 companies scheduled to release earnings this week. 

Private survey showed the U.S. service sector contracted at the second fastest pace in October excluding the initial period of the coronavirus pandemic in 2020, according to S&P Global. 

The PMI service index declined to 47.3 in October from 49.5 in September. 

Any reading below 50 indicates contraction and above shows expansion.   

Energy prices were volatile and natural gas prices recovered from multi-month lows. 

Crude oil declined 45 cents to $84.51 a barrel and natural gas rose 52 cents to $5.91 a thermal unit. 

The yield on 2-year Treasury notes increased to 4.50%, 10-year Treasury notes rose to 4.24% and 30-year Treasury bonds eased to 4.52%. 

A narrow list of stocks enjoyed favor among investors with AutoZone, Genuine Parts Company and O'Reilly Auto traded at record highs. 

CarMax, Crown Castle, Estee Lauder and Tesla closed at new 52-week lows.  

On Wall Street, China linked stocks took a beating after the Chinese Communist Party appointed Xi Jinping for the third term, increasing the risk of stricter control on tech giants.   

Alibaba, Baidu and Tencent Holdings dropped more than 11% and Pinduoduo plunged 24.5%. 

China political reshuffle also heightened investor anxieties and companies with significant China business also closed down. 

Starbucks Corporation fell 4.8% and the coffee chain operates more than 6,000 locations in China. 

Casino operators Las Vegas Sands Corp dropped 10.6% to $34.92 and Wynn Resorts, Limited declined 3.6% to $56.61.  

Tesla Inc declined 0.9% to $211.90 after the electric vehicle maker rolled back some of recent price increases in China 

Tesla slashed starting price for the Model 3 Sedan to 265,900 renminbi ($36,615) from 279,900 renminbi ($38,553) 

Tesla also lowered the starting price for the Model Y sports utility vehicle to 289,900 renminbi (39,931) from 316,900 renminbi (43,650). 

 

European Indexes Jump 2%

The DAX index advanced 1.6% to 12,931.45, the CAC-40 index gained 1.6% to 6,131.35 and the FTSE 100 index increased 0.6% to 7,013.99. 

The euro fell to 98.78 U.S. cents and the British pound edged up to $1.13. 

Brent crude oil fell 23 cents to $93.22 a barrel and TTF natural gas declined 12.7% to $99.17 per MWh.  

The yield on 10-year German bunds fell to 2.32%, French bonds eased to 2.86%, Italian bonds declined to 4.57% and the UK bonds to 3.72%. 

Philips Electronics NV dropped as much as 5% but recovered to close down 2.2% to