Tech Rally Lifts Wall Street Indexes

Barry Adams
23 Jan, 2023
New York City

Stocks on Wall Street traded higher as investors await a flood of corporate earnings this week. 

Market sentiment was positive on the hopes that more policymakers may support a smaller rate hike at the next Fed's meeting next week despite the tight labor market conditions. 

Spotify SA was the latest tech company to announce significant job cuts as tech companies prepare for a different economic reality after the pandemic-driven boom. 

Market exuberance was driven in part on the hopes of a rebound in China business activities after China pivoted from "zero-covid" to "peak infection" policy. 

The positive sentiment was also supported by Japan scaling back its antivirus measures and reopening borders as early as this spring. 

The S&P 500 index increased 1.7% to 4,039.09 and the Nasdaq Composite index advanced 2.4% to 11,404.88.

 

Crude Oil Advance to 2-month High

Crude oil traded near a 2-month high as investors assess global demand and supply and brace for additional sanctions on Russian oil from the European Union and the U.S. 

Crude oil increased 68 cents to $82.35 a barrel and natural gas edged higher 10 cents to $3.27 a thermal unit. 

 

U.S. Treasury Yields Hold Firm 

The yield on 2-year Treasury notes inched higher to 4.23%, 10-year Treasury notes edged up to 3.52% and 30-year Treasury bonds increased to 3.70%. 

 

U.S. Stock Movers 

Apple Inc rose 3.2% to $142.23 and the maker of popular computing devices is looking to diversify its manufacturing base following the rising tensions between China and the U.S. 

Apple Inc plans to increase its iPhones production in India to 25% from the current 5% to 7%, commerce and industry minister Piyush Goyal said today.

Spotify Technology SA increased 2.2% to $100.22 after the audio streaming platform said it plans to trim its workforce by 6%. 

Baker Hughes Company declined 1.1% to $30.74 after the oil services provider reported higher revenues but profit dropped in the fourth quarter. 

Revenue increased 7.7% to $5.91 billion from $5.49 billion last year and net income dropped 38% to $182 million from $394 million and diluted earnings per share declined to 18 cents from 44 cents a year ago. 

The oil services provider retained its positive outlook for the energy sector despite tightening monetary conditions and operating challenges under recessionary conditions. 

 

European Markets Extend Gains, Euro at New 9-month High 

European markets traded higher supported by rising tech stocks. 

Benchmark indexes in the region advanced on the hopes of China's reopening, falling natural gas prices and slower rate hikes in the U.S. but the European policymakers supported aggressive rate hikes at the next meetings in February and March. 

The Euro Area consumer sentiment index in January 2023 improved to the high not seen since February 2022 

The DAX index increased 0.5% to 15,102.95, the CAC-40 index rose 0.5% to 7,032.02 and the FTSE 100 index closed up 0.2% to 7,784.67. 

The euro rose to a new 9-month high of $1.09 on the expectations of 50 basis points rate increases at least at the next meetings in February and March.

The euro inched higher to a new 9-month high of $1.09, the British pound edged lower to $1.233 and the Swiss franc closed down to 92.39 U.S. cents. 

The yield on 10-year German Bunds advanced to 2.20%, French bonds traded higher to 2.65%, the UK Gilts to 3.35% and the Italian bonds to 4.01%. 

 

Yen Drifts Lower, Tepco Seeks Higher Rates 

Markets in Tokyo closed higher after the yen retreated from 7-1/2 month high reached last week and the Bank of Japan's minutes of meeting showed that the central bank took actions to improve bond market functioning. 

The Bank of Japan left its ultraloose monetary policy intact after the two-day meeting ending on December 20 but the meeting was also adjourned for 30 minutes to allow government representatives to discuss with the finance ministry, highlighting the gravity of the decision.  

Tokyo Electric Power Company declined 1.5% to ¥445.0 and the power utility company said it applied to the industry ministry to raise the residential utility rate by 30% from June to cover the higher fuel procurement expenses. 

Tepco also estimated a financial year ending in March loss of ¥317 billion or $2.4 billion compared to a ¥5.64 billion profit in the previous year, due to higher natural gas import prices and elevated wholesale electricity costs. 

The Nikkei 225 index added 1.3% to 26,906.04 and the yen closed at 130.63 against the U.S. dollar. 

 

Infection Spike Worries China Investors 

Markets in mainland China, Hong Kong, Singapore and South Korea were closed to celebrate the Lunar New Year. 

Chinese markets will resume normal operations on January 30. 

In Friday's trading, the Shanghai Composite index jumped 0.8% to  26,906.04  and the Hang Seng index advanced 1.8% to 22,044.65. 

 

Bank Earnings Lift India Indexes 

Stocks in Mumbai traded higher after five leading banks, Axis Bank, Canara Bank and ICICI Bank, IDBI and Kotak Mahindra reported higher than expected earnings.  

Indian market sentiment was also positive after the U.S. Fed officials' comments supported smaller rate hikes in New York on Friday. 

The Sensex index added 0.5% or 319.90 points to 60,941.67 and the Nifty index jumped 0.5% or 90.90 to 18,118.55. 

The rupee edged lower to 81.30 against the U.S. dollar.