Wall Street higher on earnings hopes

An optimistic earnings outlook helped push Wall Street higher on Tuesday, while concerns over global economic growth and expectations on recession heavily weighed on oil and boosted bond yields.

The tech-heavy Nasdaq led the way for gains in U.S. markets, shaking off lower trading in Europe. With many corporations beginning to report stronger than expected earnings, investors were hopeful it could be easier to weather any economic slowdown from higher rates and geopolitical turmoil.

The Nasdaq composite and Nasdaq 100 were up about 1.8% each. Switch (SWCH) was an outsize gainer in the technology sector, up more than 3%. After hitting a high of 31.80 earlier this month, SWCH broke out over a short trendline Tuesday and the stock’s relative strength line is in new high ground.

Top gainers in the Nasdaq 100 included security software stock Okta (OKTA). Shares jumped more than 7%, but OKTA is still more than 45% off its high and nowhere near a proper entry.

The MSCI world equity index (.MIWD00000PUS), which tracks shares in 45 nations, was up 0.57%. The Nasdaq Composite (.IXIC) jumped 1.81% around midday, while the Dow Jones Industrial Average (.DJI) was up 1.17% and the S&P 500 (.SPX) gained 1.27%. Top gainers in the S&P 500 included financial stocks like Citizens Financial (CFG) and Signature Bank (SBNY), but both stocks are still on downtrends below their 200-day moving averages.

The stock market held strong gains in afternoon trading Tuesday. Several stocks in the Dow Jones today were up 3% or more today, including Johnson & Johnson (JNJ), which reported strong earnings. Other top gainers in the Dow Jones included Walt Disney (DIS), Nike (NKE) and Boeing (BA).

The Dow Jones Industrial Average was up 1.2%, and the S&P 500 rallied 1.3%. Volume on the Nasdaq and NYSE was a tad higher compared to the same time Monday.

The surge came even as global economic bodies began to air warnings on economic growth. Both the World Bank and the International Monetary Fund slashed their global economic outlooks for 2022 by nearly a full percentage point, citing turmoil emanating from Russia’s invasion of Ukraine and the pitched battle against inflation worldwide.

Heineken (HEIN.AS), Nestle (NESN.S) and Renault (RENA.PA) report out of Europe this week. Netflix (NFLX.O), Tesla (TSLA.O) and Verizon are among companies scheduled to report this week from the United States.

Of the 49 companies in the S&P 500 that have reported quarterly earnings so far, nearly 80% have topped profit estimates.

IBM shares rose 3% in extended trading on Tuesday after the technology services company issued first-quarter results that beat expectations.

Netflix (NFLX) reported an unexpected decline in first-quarter net subscribers as the company navigated an exit from Russia and an increasingly saturated North American market. Shares slumped by more than 20% in after-hours trading following the report. Revenues amounted to $7.87 billion vs. $7.95 billion expected, $7.16 billion Y/Y.  Earnings per share is $3.53 vs. $2.91 expected, $3.75 Y/Y. Net subscriberswas negative -200,000 vs. +2.51 million expected, +3.98 million Y/Y.

Netflix’s drop in new users came as a surprise to Wall Street, with analysts looking for a slowdown but still positive growth in subscriptions in the first three months of 2022. Subscribers grew by nearly 4 million in the same quarter last year. In total, Netflix exited the first quarter with 221.64 million global subscribers.

Tesla will report first-quarter earnings late Wednesday, as the EV maker slowly reopens its Shanghai factory, which was shut down for three weeks due to a spike in Covid-19 cases in China. Tesla stock rose Tuesday.

Johnson & Johnson reported first-quarter adjusted earnings of $2.67 a share Tuesday, slightly beating Wall Street’s expectations. The company also trimmed its 2022 guidance acco5rding to Johnson & Johnson’s chief financial officer, Joe Wolk.

US stocks and government bond yields rose Tuesday as investors parsed the latest round of earnings reports for signs that corporate profits are holding up despite inflation.

Analysts expect profits from big US companies to keep growing this year even as costs rise. That has bolstered the bull case for equities at a time when investors are anxious over the Federal Reserve’s plans to raise interest rates to fight inflation.