4.05pm: All eyes on inflation data
US markets ended with solid gains as tech shares continued to rally throughout the day, while investors await corporate earnings from major players– including Disney and Uber– due after the bell.
With a sharp jump of 2%, the Nasdaq Composite closed at 14,490, while the S&P 500 was up by 1.4% at 4,587, and the Dow Jones Industrial Average ended with gains of 0.9%, or 305 points, at 35,768.
The Nasdaq Composite has gained about 8% since its last slump in January when it dropped into the correction zone.
“Of course, tomorrow could be an entirely different story, or it could have a Disney-style happy ending,” commented Danni Hewson, AJ Bell financial analyst.
He noted that the mouse house numbers are expected to be good, particularly from the company’s theme parks, close attention will be paid to subscriber numbers for its streaming service.
“Disney has certainly been pumping out the content, intent on finding new audiences who wouldn’t normally plump for what it offers,” Hewson said.
Netflix was pummelled after its last update “with investors in no mood to cut tech giants any slack”, Hewson noted. Shares of the streaming giant dropped by 29% following the corporate earnings in January.
“But the big upset might come tomorrow,” Hewson warned. “Will the inflation thermostat in the US have risen above 6% and how far have investors really gone towards fully pricing things in?”
The Consumer Price Index report is due at 8:30 am Eastern Time on Thursday.
12.05pm: Nasdaq outperforms amid earnings
US equities continued to exhibit sharp gains around midday as the tech-laden Nasdaq outperformed - gaining more than 7% from its recent low during the last week of January – while investors digested more positive corporate earnings.
At noon, the Nasdaq Composite rose sharply, up 1.5%, and the broader S&P 500 index gained 1.2%, while the Dow Jones Industrial Average maintained gains of 0.8%, or 281 points, at 35,752.
“It has been a day of solid gains for equity markets, which continue to put the volatility of January behind them,” commented Chris Beauchamp, chief market analyst at online trading platform IG.
He noted that stocks of all types and sectors have made headway, “a fact underlined by the inflows to equity markets in recent weeks, which has shown that investors are still content to buy the dip.”
The notable movers for tech shares included Meta which gained over 2.7% after a dramatic fall following its earnings report last week.
“Stock markets have found the going easier thanks to the lack of central bank meetings, and earnings have not had the shock or awe impact that dominated last week,” said Beauchamp.
Meanwhile, Thursday’s US Consumer Price Index (CPI) report is expected to continue to highlight inflationary pressures. Analysts are estimating a price hike of 0.4% in January, a 7.2% gain over the year.
On the corporate front, Uber, Disney, MGM Resorts, and Mattel (NASDAQ:MAT) are all expected to post earnings later in the evening.
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10.00am: US markets extend rally
US stocks traded high early on Wednesday as investors awaited another round of earnings from more companies including Uber and Disney, as well as CPI inflation data tomorrow.
The Nasdaq Composite and the broader S&P 500 index both gained 1%, while the Dow Jones Industrial Average was up by 0.8%, or 273 points, at 35,742.
“It's hard to pinpoint exactly what has changed; whether it's earnings that are lifting the mood or the soothing tones of central bankers desperately trying to manage expectations,” said Craig Erlam, senior market analyst, UK and EMEA at OANDA .
“Perhaps it's simply a case of investors coming to terms with the tightening environment and feeling more comfortable with it,” he added.
However, Erlam warned, "that could change quickly if the inflation outlook worsens, as has repeatedly been the case in recent months."
6.30am: US stocks seen opening up
US stocks are expected to open higher, building on Tuesday’s gains as investors continue to focus on corporate earnings including those from Disney and Uber Technologies Inc (NYSE:UBER) ahead of key inflation data due for release later this week.
Futures for the Dow Jones Industrial Average rose 0.54% in Wednesday pre-market trading, while the broader S&P 500 index gained 0.72% and the Nasdaq 100 added 0.94%.
Markets rose on Tuesday following positive earnings from a number of companies. The Nasdaq climbed 1.28% to 14,194, while the Dow Jones added 1.06% to 35,463 and the S&P 500 gained 0.84% to 4,522.
However, the blowout in bond yields continued with the benchmark 10-year Treasury note finishing at 1.93%, having traded above 1.96%, commented Neil Wilson, chief market analyst at Markets.com.
US consumer price data, due for release on Thursday, are expected to show that prices climbed 7.3% year-over-year in January, according to a Reuters poll of economists. The consumer price index climbed 7% in December, the biggest year-on-year increase since June 1982.
“Earnings were important and trumped concerns about inflation and rates,” Wilson said. “Harley-Davidson rose 15% on a surprise rise in profits. Peloton leapt 25% as it ousted its CEO John Foley, reported a bigger-than-expected loss and slashed its guidance: bad news had been well and truly priced so the change at the top is seen as a positive...or could just be some short covering. Likelihood is the company gets bought by one of the big tech names like Amazon.
"Chipotle Mexican Grill (CMG) was up 8% after-hours as it beat expectations on earnings – pricing power was key. So far about three-quarters of the companies on the S&P 500 that have thus far reported have beaten EPS expectations. Another 200 to go..."