By Chris Prentice and Marc Jones
WASHINGTON/LONDON (Reuters) – Big Tech gave major U.S. stock indexes a boost on Tuesday and European shares ended largely unchanged as rising bond yields pressured technology stocks and a sharp fall in oil prices took the shine off bumper profits from oil company BP (LON:BP).
The euro retreated as the European Central Bank tried to cool interest rate hike expectations.
Wall Street shares shook off a groggy start and early losses as Apple Inc (NASDAQ:AAPL) and Amazon.com Inc (NASDAQ:AMZN) each gained more than 1%. Shares of bank stocks including Bank of America Corp (NYSE:BAC), JPMorgan Chase & Co (NYSE:JPM) and Wells Fargo (NYSE:WFC) gained ahead of a key inflation reading due this week.
The Dow Jones Industrial Average rose 204.25 points, or 0.58%, to 35,295.38, the S&P 500 gained 12.73 points, or 0.28%, to 4,496.6 and the Nasdaq Composite added 79.41 points, or 0.57%, to 14,095.07 by 2:44 p.m. EST (1944 GMT).
Earlier in the session major indexes were down after disappointing Pfizer (NYSE:PFE) earnings, another slump in Facebook (NASDAQ:FB) owner Meta’s shares and the collapse of Nvidia’s mega deal to buy the firm that designs chips for the likes of Apple.
Europe’s benchmark STOXX 600 finished flat with tech stocks among the weakest performers amid pressure from rising bond yields.
Oil and gas stocks sank 1.8%, tracking a drop in crude prices. FTSE-listed BP fell over 2% even after reporting a whopping $12.8 billion annual profit. (EU)
The MSCI world equity index rose 0.19%.
“Earnings season has been top of mind for market participants for the past few weeks. Results have been, on balance, better than estimates,” Art Hogan, chief market strategist at National Securities in New York, said in a note.
“As we wrap up the earnings season this week, investors focus will likely shift from the micro corporate earnings to the macro like the Federal Reserve, particularly pertaining to the pace of interest-rate rises and how to manage the balance sheet,” Hogan added, pointing to expectations for as many as five Fed rate hikes.
Comments from ECB President Christine Lagarde on Monday that there was currently no need for major monetary policy tightening weakened the euro for a second consecutive day.
Currency and bond market traders are laser-focused on which central banks will hike their interest rates the fastest and furthest this year following the rapid rise in global inflation.
The euro was down 0.25 percent.
The dollar index, which tracks the greenback versus a basket of six currencies, rose 0.197 points or 0.21 percent, to 95.596. The yen was up 0.35 percent, at $115.5200.
The benchmark 10-year U.S. Treasury yield hit its highest level since November 2019 on Tuesday, as yields continue to rise before a key inflation reading this week and expectations that the U.S. Federal Reserve will start tightening monetary policy. [US/]
Three-year treasury yields edged lower after a $50 billion auction.
“Central banks globally have all engaged in a hawkish pivot,” said BlueBay Asset Management’s David Riley. “As their tolerance for higher inflation persistently is less than previously signalled, we are shifting to a regime where there will be more macro volatility.”
Germany’s 10-year government bond yield, the benchmark of the bloc, rose 4.5 bps to touch its highest since January 2019 at 0.274%.
Italian government bond prices continued to underperform their peers, with the 10-year yield rising 7 bps to 1.880%.
GRAPHIC: Central bank balance sheets, https://fingfx.thomsonreuters.com/gfx/mkt/znvnejxnmpl/CBANKS1.PNG
Facebook owner Meta was down after billionaire investor Peter Thiel decided to step down from the company’s board, extending its slide following Thursday’s record plunge.
Pfizer fell 3.6% as the drugmaker’s forecasts for its COVID-19 vaccine and antiviral pills fell short of Wall Street estimates, while Coty jumped 6% after raising its forecasts.
Asia’s session had been volatile overnight. MSCI’s broadest index of Asia-Pacific shares ended flat overall but blue chip Chinese stocks dropped to a 19-month low after big tech firms’ heavy losses and U.S. export warnings on 33 new Chinese firms. [.SS] (HK)
Russia’s rouble reached a four-week high after marathon talks between President Vladimir Putin and his French counterpart Emmanuel Macron kept up hopes that war in Ukraine will be avoided.
Oil prices fell $2 a barrel as investors surmised that the resumption of indirect talks between the United States and Iran could revive an international nuclear agreement and allow more oil exports from the OPEC producer.
A deal could return more than 1 million barrels per day (bpd) of Iranian oil to the market, boosting global supply by about 1%. The nuclear talks resumed in Vienna on Tuesday.[O/R]
Gold prices advanced to a near two-week high on Tuesday, buoyed by mounting inflation concerns and Russia-Ukraine tensions, although expectations for a U.S. interest rate hike limited gains.
U.S. gold futures GCv1 settled up 0.37% at $1,827.90 per ounce. Spot prices rose 0.37 percent.
Wall Street rallies on tech boost, European shares end flat