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Tech companies led a broad rally for stocks on Wall Street on Wednesday, pushing the market further into the green for the week.
The Standard & Poor’s 500 index rose 1.5%, the Dow Jones industrial average gained 0.9% and the technology-heavy Nasdaq composite rose 2.1%. The indices started the day higher and never slipped into the red, a change from the recent period of market volatility.
More than 85% of S&P 500 stocks gained ground, with technology and communications stocks fueling much of the gains. Microsoft rose 2.2% and Google’s parent company Alphabet gained 1.6%.
Bond yields were mixed. The 10-year Treasury yield remained stable at 1.95%. It is still the highest since the start of the pandemic.
Investors continued to focus on a mixed batch of corporate earnings reports as they tried to gauge how U.S. companies are coping with higher inflation and continued global supply chain disruptions.
Of the roughly 60% of S&P 500 companies that reported results for the final three months of 2021, about 62% generated earnings and revenue that beat Wall Street forecasts, according to S&P Global Market Intelligence.
“Earnings and sales have come up really well overall relative to expectations at the start of this quarter, so that’s a positive force in the market,” said Lisa Erickson, senior market strategist at US Bank Wealth Management. .
The S&P 500 rose 65.64 points to 4,587.18. The benchmark is now about 4.4% lower than the record high it hit on January 3.
The Dow gained 305.28 points to 35,768.06 and the Nasdaq rose 295.92 points to 14,490.37. The major stock indexes are all on pace for a weekly gain.
Smaller company stocks also posted gains. The Russell 2000 rose 38.13 points, or 1.9%, to 2,083.50.
Investors are looking closely at corporate earnings reports to determine how different industries are dealing with lingering supply chain issues. This is one of the factors that pushes inflation higher and makes operations more expensive for businesses while making products more expensive for consumers.
Chipotle Mexican Grill jumped 10.2% after beating the analyst’s fourth-quarter profit and revenue forecast. The company raised menu prices by 4% in December as it faced higher beef and labor costs.
“Overall, companies have found the price increase to be more palatable to their clients than in the past,” said Scott Wren, senior global market strategist at Wells Fargo Investment Institute.
Wall Street will get another update Thursday on rising prices when the Labor Department releases its inflation report for January. Economists predict the report will show inflation hit a four-decade high of 7.3%.
A surprisingly weaker price rise could be seen as a signal of slowing inflation and could support markets, although a larger rise could weigh on equities.
“People are trying to position themselves where they want to be before this issue comes out tomorrow,” Wren said.
The persistent rise in inflation could increase pressure on the Federal Reserve to accelerate plans to raise interest rates to fight inflation.
Investors expect the Fed to hike rates at least four times this year, starting next month. They remain concerned that the Fed may need to raise rates more often than that if inflationary pressure remains high. As a result, markets have become more volatile, with investors moving money to prepare for an investment environment with higher interest rates after a long period of extremely low interest rates throughout the pandemic.
Wall Street mostly applauded the latest round of corporate report cards on Wednesday. Taco Bell owner Yum Brands rose 2.2% after posting strong fourth-quarter revenue. Freight transport company XPO Logistics rose 8.3% after also posting strong financial results.
Walt Disney and Uber Technologies increased after-hours trading after each reported results that beat Wall Street estimates.
Drugstore chain CVS fell 5.4% for the biggest drop in the S&P 500 after giving investors disheartening earnings forecasts.
Twitter and Coca-Cola will release their results on Thursday.
