Market Momentum Builds as Earnings Surpass Expectations
The US stock market is experiencing a boost today, driven by a slew of companies reporting higher-than-expected profits for the end of last year. The S&P 500 index is up 0.5% in midday trading, with the Dow Jones Industrial Average rising 337 points, or 0.8%, and the Nasdaq composite edging up 0.1%.
Global Markets React Cautiously to Trump’s Return
As Donald Trump returned to the White House on Monday, markets around the world took a wait-and-see approach, with many indexes making only modest moves in mixed trading. Trump’s promises to reshape global trade and the economy have sparked concerns about the impact on other countries, but so far, the reaction has been muted.
Earnings Season Off to a Strong Start
Companies are delivering stronger earnings growth to offset the downward pressure of higher Treasury yields. Charles Schwab, for example, rose 3.8% after reporting a better profit report than analysts expected, crediting clients pouring more dollars into its assets, which rose 19% from a year earlier to $10.10 trillion. 3M also climbed 4.2% after reporting profit and revenue that edged past analysts’ expectations.
Treasury Yields Ease, Providing Relief
In the bond market, Treasury yields eased, giving back some of their recent gains that had put pressure on stock markets worldwide. The yield on the 10-year Treasury fell to 4.56% from 4.62% late Friday, providing relief to investors.
Walgreen Boots Alliance Takes a Hit
However, not all companies are faring well. Walgreen Boots Alliance plummeted 12.8% after the US Justice Department accused the company of filling millions of prescriptions without a legitimate purpose, including for dangerous amounts of opioids.
Global Markets React
In stock markets abroad, indexes rose slightly across Europe after finishing mixed in Asia. Hong Kong’s Hang Seng index rose 0.9% after embattled Chinese property developer Country Garden got a reprieve on its deadline for working out an agreement with its creditors. In the cryptocurrency market, bitcoin pulled back from its record above $109,000 set on Monday and was sitting below $104,000.
The Road Ahead
As earnings season continues, investors will be watching closely to see if companies can maintain their momentum. With Treasury yields still elevated, companies will need to deliver strong earnings growth to offset the downward pressure. One thing is clear: the market is poised for a wild ride in the coming weeks and months.
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