U.S. Stocks Move Higher After Wild Ride


U.S. stocks traded higher as economic growth data came in stronger than expected, and investors parsed more earnings from major companies. 

The Dow Jones Industrial Average rose 571 points, or 1.7%. The S&P 500 added 1.7% and the Nasdaq Composite climbed 1.5%. All 11 of the S&P 500’s 11 sectors were recently in the green, with all but the consumer discretionary sector ahead at least 1%.

The economy grew at an annualized rate of 6.9% last quarter, the biggest one-year jump since 1984. Economists had forecasted 5.5% growth, propelled by consumer spending, business investment and efforts to rebuild inventories. 

The Stoxx Europe 600 added 0.6%, reversing direction after declining moderately. Earlier, Asia-Pacific indexes fell sharply, with gauges in China, Japan and South Korea hitting their lowest closing levels in more than a year.

Today’s moves came after a bout of volatility that saw U.S. indexes swing wildly this week. The VIX hit its highest level in a year on Wednesday. Markets have been buffeted by concerns about central-bank policy around interest rates and inflation, and geopolitical tensions over Russia

Earnings season is ongoing and is seen as the next big test of whether the stock market’s sky-high valuations can be justified.  

McDonald’s

shares were little changed after the company missed analysts’ profit estimates, despite a sales boost. Blackstone rose 8% after it reported that net income nearly doubled.

Mastercard

declined 0.5% after it said operating expenses had jumped.

“What I’m looking for this earnings season is inflationary pressures and margins—if companies are able to hold on to their profits,” Fahad Kamal, chief investment officer at Kleinwort Hambros, said. “Are they able to pass along prices, are they able to maintain pricing power?” As central banks rein in liquidity, that is what becomes really important, he added. 

To temper elevated inflation, Federal Reserve Chairman Jerome Powell said the central bank intends to raise short-term interest rates in mid-March. Photo: Federal Reserve

On Wednesday, the Fed signaled it would begin raising interest rates in mid-March, its latest step toward removing stimulus to bring down inflation. Fed Chairman

Jerome Powell

said the central bank could continue to lift rates faster than it did during the past decade. 

The news shows the central bank “is in a hurry,” said

John Vail,

chief global strategist at Nikko Asset Management in Tokyo. “The Fed got serious really fast and it’s having an effect on markets.”

The yield on the benchmark 10-year Treasury note edged down to 1.836% Thursday from 1.845%. Shorter-dated government bonds continued to sell off, with the two-year Treasury yield rising to 1.179%, notching a new pandemic high. 

The greenback strengthened, with the WSJ Dollar Index rising to the highest level since July 2020. Precious metals fell, with gold recently down 1.3%.

“The yields in the U.S. have gone up as the path of rate hikes increases. There’s a bit of a safe-haven play mixed in there as well, that will be a support environment for the dollar,” said Mr. Kamal. 

Earnings season is seen as the next big test of whether sky-high valuations can be justified.



Photo:

Allie Joseph/Associated Press

Apple,

Visa

and food and beverage giant Mondelez are due to report Thursday after markets close.  

Netflix

rose 6.1% after billionaire investor

William Ackman

said his hedge fund had bought 3.1 million shares. Moderna climbed 3.3% after the company said it has started testing a version of its Covid-19 vaccine modified to target the Omicron variant

Teradyne,

an equipment manufacturer, tumbled close to 16% premarket after its profit guidance for missed analysts’ expectations. Records showed that company insiders have sold thousands of shares in recent days. Software firm

ServiceNow

rose nearly 11% after beating Wall Street’s estimates on revenue.

Weekly jobless claims were 260,000, a decline from the previous week. Analysts were expecting a drop amid a tight labor market. Orders for durable goods in December slipped 0.9%. 

Oil prices edged up. Brent, the global benchmark for crude, climbed 1.1% to trade at $89.72 and hit a fresh seven-year high. Declining inventories have been pushing up prices, according to Nordic bank SEB.  

Cryptocurrencies edged up, with bitcoin extending its decline into a third day to trade around $36,500.

Meta Platforms,

formerly known as Facebook, is winding down its plans to build a cryptocurrency payments network and is selling its technology to a small bank, The Wall Street Journal reported.

—Quentin Webb contributed to this article.

Write to Megumi Fujikawa at megumi.fujikawa@wsj.com, Suryatapa Bhattacharya at Suryatapa.Bhattacharya@wsj.com and Anna Hirtenstein at anna.hirtenstein@wsj.com

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