Wall Street’s main indexes regained footing on Thursday, recovering from a brief shock after the resignation of Liz Truss as prime minister of the United Kingdom, as focus moved back to positive forecasts from IBM and AT&T.
IBM Corp shares gained 4.1%, leading the advance among Dow components after the software and IT services company beat quarterly earnings estimates on Wednesday and said it expects to exceed full-year revenue growth targets.
Fellow blue-chip stock Verizon Communications Inc rose 2.3% after peer AT&T Inc jumped 9.9% upon raising its annual profit forecast.
Both the companies lifted up the S&P 500 communication services sector index by 1.9% to lead gains among the 11 major sectors on the benchmark index.
This comes after upbeat results from big U.S. banks, Netflix Inc, Procter & Gamble Co and Travelers Companies Inc prompted analysts to raise third-quarter profit growth expectations for S&P 500 companies to 3.1% from a 2.8% increase earlier in the week, according to Refinitiv data.
However, the estimate is still sharply lower than an 11.1% increase that was forecast at the start of July.
“With the small set of companies that have reported earnings so far, we’re seeing majority of them beat profit estimates and I would very much put that in the ‘better-than-feared’ category,” said Art Hogan, chief market strategist at B. Riley Wealth in New York.
Tesla Inc dropped 6.6% as the electric vehicle maker flagged persistent logistics challenges, with fourth-quarter deliveries growing by less than the aimed 50%.
Wall Street’s main indexes have been hammered by fears of aggressive interest rate hikes by the Federal Reserve in recent months, with Treasury yields climbing to multi-year highs amid no real signs of U.S. inflation slowing.
Data showed the number of Americans filing new claims for unemployment benefits fell unexpectedly last week, pointing to a tight labor market even as demand for labor is cooling amid higher interest rates.
The U.S. central bank is expected to deliver its fourth straight 75 basis-point hike in its November meeting, with some even pricing in a full percentage point increase.
U.S. stocks were briefly pressured after UK’s Liz Truss announced her resignation just six weeks into the job, brought down by an economic program that had sent shockwaves through global financial markets and divided her Conservative Party.
At 10:09 a.m. ET, the Dow Jones Industrial Average was up 299.33 points, or 0.98%, at 30,723.14, the S&P 500 was up 26.44 points, or 0.72%, at 3,721.60 and the Nasdaq Composite was up 102.57 points, or 0.96%, at 10,783.08.
Advancing issues outnumbered decliners by a 2.38-to-1 ratio on the NYSE and by a 2.09-to-1 ratio on the Nasdaq.
The S&P index recorded two new 52-week highs and 10 new lows, while the Nasdaq recorded 17 new highs and 104 new lows.
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