Wall Street Ends Higher, Earnings Digested

Wall Street Ends Higher, Breaking a 3-Day Losing Streak

Wall Street rallied to end higher on Wednesday, powered by a recovery in interest-sensitive growth stocks as investors digested hot inflation data and a mixed bag of quarterly results.

Stocks closed higher on Wall Street as investors reviewed the latest round of corporate earnings and an upbeat report from Delta Air Lines that bodes well for the travel industry. But Delta Air Lines delivered more positive results, beating consensus expectations and forecasting a return to profit in the current quarter due to historically high demand. Its shares jumped, as did the broader S&P 1500 airline index. It is great that demand is so strong. However, drive inflation higher, which will force the Fed to continue to raise rates, resulting in a weaker stock market.

Stocks closed higher on Wall Street Wednesday as investors reviewed the latest round of corporate earnings and an upbeat report from Delta Air Lines that bodes well for the travel industry. The S&P 500 rose 1.1%, the Dow Jones Industrial Average rose 1% and the Nasdaq rose 2%. Travel-related companies had some of the biggest gains. The S&P 500 is coming off three straight losses brought on by persistent worries about inflation and how the Federal Reserve will respond to it. The government reported that surging energy costs pushed wholesale prices up a record 11.2% last month from a year earlier.

Stocks rose in afternoon trading on Wall Street Wednesday as investors reviewed the latest round of corporate earnings and an upbeat report from Delta Air Lines that bodes well for the broader travel industry. The S&P 500 rose 1% as of 3 p.m. Eastern. The Dow Jones Industrial Average rose 281 points, or 0.8%, to 34,499 and the Nasdaq rose 1.9%.

Travel-related companies were among the biggest gainers after Delta reported strong revenue during its first quarter and solid bookings. The update is encouraging for the broader travel sector as airlines, cruise lines and hotels prepare for the summer vacation season.

Delta rose 6.3% and rival American Airlines jumped 9.8%. Southwest and United Airlines rose more than 5%. Cruise line operators Carnival and Royal Caribbean also had solid gains, along with Expedia Group.

Technology stocks also did much of the heavy lifting for the broader market. Pricey valuations for many of the bigger technology companies lend more weight to directing the broader market higher or lower.

Banks slipped following a disappointing earnings report from JPMorgan, which fell 3.4% after revealing a sharp drop in profits as it wrote down nearly $1.5 billion in assets due to higher inflation and the Russian-Ukrainian War. Bond yields fell. The yield on the 10-year Treasury fell to 2.69% from 2.72%. Falling US Treasury yields helped the tech-heavy Nasdaq lead all three major US stock indexes higher, with semiconductors outperforming the broader market.

The gains for stocks follow three straight losses for the benchmark S&P 500 index brought on by persistent worries about inflation and the tough medicine the Federal Reserve is planning to use against it, higher interest rates.

The Labour Department reported that the surging cost of energy pushed wholesale prices up a record 11.2% last month from a year earlier — another sign that inflationary pressure is widespread in the US economy. That report comes a day after the department reported that consumer prices remain at their highest levels in generations.

In the near term there’s a lot of focus on what the inflection point looks like and there’s confidence now that we’re seeing a peak. Inflation, while seemingly peaking, will likely stick around for a while as cost pressures filter their way through the markets over the next few quarters, he said.

The persistently rising inflation has prompted the Federal Reserve to tighten its monetary policy in order to temper the impact of inflation on businesses and consumers. The central bank has already announced a quarter-percentage point rate hike and is expected to continue raising rates through the year.

The Fed revealed in the minutes from its latest meeting that it’s prepared to hike short-term rates by half a percentage point, double the usual amount, at some upcoming meetings, something it hasn’t done since 2000. The Fed wants to get to neutral or something close to it as quickly as possible.

Lingering concerns about inflation and rising interest rates have been worsened by Russia’s invasion of Ukraine. The conflict has made for volatile energy prices as oil supplies already remain tight amid rising demand. US crude oil prices rose 3.6% and are up roughly 40% for the year. That has driven up gasoline prices and added to inflation’s hit on people’s wallets.