S&P 500, Nasdaq rose higher on Tesla gains

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., June 30, 2022. REUTERS/Brendan McDermid/File Photo

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  • Tesla shares rise as profits beat expectations
  • Energy stocks lead sector-wise declines
  • AT&T is downsizing the communications services sector
  • Indexes up: Dow 0.10%, S&P 0.62%, Nasdaq 1.01%

July 21 (Reuters) – Nasdaq and the S&P 500 rose on Thursday as gains in electric carmaker Tesla following its strong quarterly results helped offset a fall in telecom and energy stocks.

Tesla ( TSLA.O ) rose 9.3%, while telecom shares fell after AT&T Inc ( TN ) cut its cash flow forecast and said some subscribers are delaying bill payments and energy shares fell on weak crude oil prices. read more

Tesla’s profits benefited from price increases for the cars and helped offset production challenges. Encouraging reports from automaker and streaming giant Netflix Inc ( NFLX.O ) have boosted megacap growth stocks that have been under pressure from rising interest rates.

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“Is it possible that Tesla is giving a short-term rally? Yes, absolutely,” said Giuseppe Sette, president of quantitative research firm Toggle.

“But it seems likely that if we really are in an era of liquidity withdrawals and quantitative tightening, rallies in high-momentum stocks like Tesla may not be secular or cyclical, but only fairly short-term.”

The S&P 500 technology sector (.SPLRCT) rose 1.1%, while the communications services index (.SPLRCL) fell 0.5%. AT&T shares plunged 7.2% and rivals Verizon Communications Inc ( VZ.N ) and T-Mobile US Inc ( TMUS.O ) each fell nearly 2.7%.

Falling oil prices hit the energy sector S&P 500 (.SPNY), which fell 2.6% to lead declines across the 11 major sectors.

Market players are now eagerly awaiting the Federal Reserve meeting next week where policymakers are expected to raise interest rates by 75 basis points.

Rising inflation also led the European Central Bank to belatedly join global peers in a rate hike cycle with an aggressive 50 basis point hike. read more

The Fed rate decision next week will be followed by the crucial US gross domestic product data for the second quarter, which is likely to be negative again.

With one common rule of thumb, two quarters of negative GDP growth means the US is in a recession. read more

In the latest signs that the US economy is slowing, the number of Americans filing new jobless claims rose to an eight-month high and a closely watched gauge of factory activity fell this month. read more

“We have a combination of the Fed expecting them to raise 75 basis points and the macroeconomic environment that has weakened significantly,” said Michael Green, chief strategist at Simplify Asset Management.

“The markets are much more focused on this dynamic and against all that we’ve sold 20% year-over-year. They’re obviously reflecting a lot of concern about all these issues.”

At 12:36 p.m. ET, the Dow Jones Industrial Average (.DJI) was up 32.94 points, or 0.10%, at 31,907.78, the S&P 500 (.SPX) was up 24.53 points, or 0.62% , to 3,984.43 and composite Nasdaq. (.IXIC) was up 120.34 points, or 1.01%, at 12,017.99.

Advancing issues outnumbered decliners by a ratio of 1.09 to 1 on the NYSE and by a ratio of 1.17 to 1 on the Nasdaq.

The S&P index recorded one new 52-week high and 29 new lows, while the Nasdaq recorded 13 new highs and 29 new lows.

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Reporting by Shreyashi Sanyal and Aniruddha Ghosh in Bengaluru; Editing by Arun Koyyur

Our standards: Thomson Reuters Trust Principles.

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