Nasdaq hits record high as growth stocks rise; inflation data weighs
July 13 (Reuters) – The Nasdaq index reversed early declines to hit a record high on Tuesday, helped by a rise in growth-linked megacap stocks and as earnings season kicked off on a positive note, while a solid rise in consumer prices in June weighed on sentiment.
A Labor Department report showed U.S. consumer prices rose by the most in 13 years last month amid supply constraints and a continued rebound in costs of travel-related services, while the so-called core CPI surged 4.5% on a year-on-year basis, the largest rise since November 1991, after rising 3.8% in May. read more
“The headline CPI numbers have shock value, for sure,” said Jamie Cox, managing partner for Harris Financial Group in Richmond, Virginia.
“However, once you realize that a third of the increase is used car prices, the transitory picture becomes more clear … inflation is rising, but things are well behaved and have not changed materially.”
Inflation and positive economic data have dictated Wall Street’s movement since mid-June as investors fear an overheating economy amid a faster reopening could force the Federal Reserve to pare back its ultra-loose monetary policies sooner than expected.
Big banks including JPMorgan Chase & Co (JPM.N) and Goldman Sachs Group Inc (GS.N) reported higher-than-expected quarterly earnings. Shares of Goldman Sachs dipped 0.4%, while JPMorgan slipped 0.7% as it suffered from a well-flagged slowdown from last year’s record-breaking trading results. read more
PepsiCo Inc (PEP.O)gained 1.8% after raising its full-year earnings forecast, betting on accelerating demand for its sodas in theaters, restaurants and stadiums as COVID-19 restrictions continue easing. read more
“When you look at the results, these banks have had some blowout numbers,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“I think further and further into the earnings season, if we keep getting good results like what we saw for the first quarter then it will provide a cushion for the market.”
June-quarter earnings per share for S&P 500 companies are expected to rise 66%, according to Refinitiv data, with market participants questioning how long Wall Street’s rally would last after a nearly 16.7% rise in the benchmark index so far this year.
At 10:12 a.m. ET, the Dow Jones Industrial Average (.DJI) was down 50.34 points, or 0.14%, at 34,945.84, the S&P 500 (.SPX) was down 1.57 points, or 0.04%, at 4,383.06, and the Nasdaq Composite (.IXIC) was up 17.86 points, or 0.12%, at 14,751.10.
Declining issues outnumbered advancers for a 2.15-to-1 ratio on the NYSE and for a 2.74-to-1 ratio on the Nasdaq.
The S&P index recorded 25 new 52-week highs and no new low, while the Nasdaq recorded 33 new highs and 23 new lows.Reporting by Devik Jain and Shreyashi Sanyal in Bengaluru; Editing by Arun Koyyur and Maju Samuel
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