Traders work on the floor of the New York Stock Exchange (NYSE), July 26, 2023.
Brendan McDermid | Reuters
Stocks rose on Tuesday as investors eagerly awaited a fresh batch of earnings reports and closely monitored the latest movements in Treasury yields.
The Dow Jones Industrial Average gained 204 points, or 0.6%. The S&P 500 added 0.7%, and the Nasdaq Composite climbed 0.9%.
Coca-Cola reported earnings and revenue that exceeded expectations, triggering a 2.8% surge in the stock price. Meanwhile, audio streaming giant Spotify experienced a remarkable 10% increase in its stock price after posting third-quarter results that surpassed expectations.
General Motors witnessed a slight decrease of 2.3% following better-than-expected third-quarter results. However, the company withdrew its full-year outlook due to rising costs resulting from the United Auto Workers union strikes.
Alphabet and Microsoft are among the companies set to report their results after market close. Other tech giants reporting this week include Amazon and Meta.
However, according to David Bahnsen, the Chief Investment Officer of Bahnsen Group, even if the tech companies exceed expectations in their earnings this week, their valuations are still astronomically high.
“No matter what results we see from big tech earnings this week, the results won’t justify their outlandish valuations,” Bahnsen said. “Even with the declines in big tech stock prices over the past three months, big tech stocks are still too expensive and are priced for perfection and then some, and that’s a dynamic that is not likely to end well.”
This week, approximately 150 companies in the S&P 500 are expected to report their earnings. So far, the season has started off on a positive note. About 23% of S&P 500 companies have already reported their earnings, with 77% of them surpassing analysts’ expectations, according to FactSet.
After a mixed session, Wall Street remains cautious as it closely monitors the movement of the U.S. 10-year Treasury yield. The yield briefly rose above 5% before falling back below that level. The recent rise in yields has raised concerns about the overall state of the economy and put pressure on the stock market. On Tuesday, the benchmark rate fell 1.5 basis points to 4.82%.
