Market Data
Wall Street Sees Gains as Earnings Reports Paint a Mixed Picture
Wall Street closed Wednesday on a positive note, with the S&P 500 rising 0.4%, the Dow Jones Industrial Average climbing 317 points (or 0.7%), and the Nasdaq composite edging up 0.2%. The gains were driven by strong performances from companies like Mattel and Amgen, which exceeded earnings expectations. Mattel, the toymaker behind Hot Wheels and Barbie, saw its stock surge 15.3% after reporting better-than-expected profits, thanks in part to the success of its Hot Wheels brand. Amgen, a biotech giant, rallied 6.5% after its quarterly profits beat forecasts, fueled by growth in its Repatha medication, which helps lower bad cholesterol and reduce heart attack risks.
However, not all big-name companies fared well. Alphabet, Google’s parent company, dropped 7.3% despite reporting stronger-than-expected profits. Investors focused on slowing growth in its cloud business, which missed revenue forecasts, and expressed concern over the company’s $75 billion investment budget for the year—$15 billion more than analysts had anticipated. This spending is part of Alphabet’s aggressive push into artificial intelligence, a sector where competition is heating up.
Tech Stocks Remain in the Spotlight Amid Earnings and Trade Worries
The tech sector remained a focal point on Wednesday, with Advanced Micro Devices (AMD) falling 6.3% despite topping profit expectations. Analysts praised AMD’s results but pressed CEO Lisa Su for more details on the performance of its AI offerings, signaling heightened expectations for tech companies to deliver not just strong profits but also clarity on their future growth drivers. This scrutiny comes amid broader concerns that stock prices have outpaced corporate profits, making equities appear expensive.
Meanwhile, trade tensions continued to loom over markets. Fears of a punishing global trade war eased somewhat after President Donald Trump granted 30-day reprieves for tariffs on Mexico and Canada. This move bolstered hopes that Trump views tariffs as a negotiating tool rather than a long-term policy. However, economists warn that tariff risks, particularly for China and the European Union, remain unresolved. Goldman Sachs economist David Mericle predicts that tariffs on EU autos could drive inflation higher, potentially keeping the Federal Reserve from cutting interest rates this year.
Economic Uncertainty Weighs on Markets as Inflation Concerns Grow
Investors are keeping a close eye on inflation, which could complicate the Fed’s approach to interest rates. Mericle expects a widely followed measure of underlying inflation to hit 2.6% by December, exceeding the Fed’s 2% target. This upward pressure on inflation could deter the central bank from cutting rates further, even as the economy faces headwinds. The Fed began cutting rates in September to ease pressure on the economy and support the job market, but rising inflation could limit its ability to provide additional stimulus.
The bond market reflected these concerns, with the 10-year Treasury yield falling to 4.42% from 4.52% late Tuesday. This decline came after a report showed weaker-than-expected growth in U.S. services businesses, with many citing poor weather conditions and concerns over potential tariff actions. However, businesses noted little immediate impact from current tariffs, according to Steve Miller, chair of the ISM’s Services Business Survey Committee.
Disney and MicroStrategy Make Headlines as Markets Close
Walt Disney Co. swung from early gains to a 2.4% loss after reporting stronger-than-expected profits, driven in part by the success of its “Moana 2” movie. Meanwhile, MicroStrategy, a company known for its bitcoin holdings, fell 2.2% ahead of its earnings report. The company also announced a name change to Strategy as part of a brand simplification aimed at highlighting its role as a “Bitcoin Treasury Company.”
Global Markets Reflect Mixed Sentiment as Trade Tensions Simmer
International markets echoed the mixed sentiment on Wall Street. In Europe, indexes saw modest movements, while in Asia, Hong Kong’s Hang Seng fell 0.9%, and South Korea’s Kospi gained 1.1%. Japan’s Nikkei 225 edged up 0.1% after reports that Honda Motor Co.’s talks to form a joint holding company with Nissan Motor Corp. were unraveling. Nissan’s stock dropped 4.9% on the news.
Overall, Wednesday’s trading reflected the delicate balance of optimism and uncertainty that has defined markets in recent weeks. While strong earnings from companies like Mattel and Amgen provided a lift, concerns over inflation, trade, and valuations kept investors cautious. As the global economy navigates these crosswinds, all eyes remain on corporate performance, central bank policy, and the ongoing trade negotiations that could shape the outlook for 2023 and beyond.
