New York Stock Market Rises on Strong Corporate Earnings... Dow Up 0.41%

Fed Officials Signal More Comments
NYCB Falls 7% Amid 'Commercial Real Estate Hit'

The three major indices of the U.S. New York stock market were rising in early trading on the 7th (local time) supported by strong corporate earnings. The market is awaiting speeches from Federal Reserve (Fed) officials and corporate earnings announcements to be released that day in search of clues about the future path of interest rates.

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As of 9:38 a.m. at the New York Stock Exchange (NYSE) on the day, the Dow Jones Industrial Average was trading at 38,678.69, up 0.41% from the previous trading day. The S&P 500, which is centered on large-cap stocks, rose 0.46% to 4,976.9, and the tech-heavy Nasdaq index was up 0.42% at 15,673.89.

By individual stocks, Snap is down more than 30% after revealing a decline in sales and a weak earnings outlook. U.S. automaker Ford is up more than 5% as both its fourth-quarter earnings and full-year outlook exceeded market expectations. Inphase Energy, a solar-related manufacturer, surged more than 18% on news that its inventory has bottomed out. New York Community Bancorp (NYCB), which plunged 22.2% the previous day after U.S. Treasury Secretary Janet Yellen expressed concerns about the commercial real estate downturn, was down nearly 7% again on the day. The bank announced it had appointed a new CEO and that deposits have increased since the end of last year, ensuring sufficient liquidity.

Although corporate earnings are supporting the New York stock market, there is widespread concern in the market that the Fed’s timing for interest rate cuts may be delayed. This is also why volatility in the stock market is expected to continue depending on the outlook for future interest rate paths.

Fed Chair Jerome Powell and officials have repeatedly conveyed messages that additional indicators need to be confirmed before a pivot (direction change). Loretta Mester, president of the Federal Reserve Bank of Cleveland, said at an event in Columbus, Ohio, the previous day, "It would be a mistake to lower rates too early and too quickly without sufficient evidence that inflation can persist and will return to 2% at the appropriate time," adding, "If the economy develops as expected, we think we will gain confidence by the end of this year and be able to start cutting rates."

Emmanuel Cau, head of European equity strategy at Barclays, analyzed, "Strong growth reveals that the last mile in the fight against inflation is very difficult for central banks," adding, "The timing and pace of upcoming rate cuts are debatable and will be a source of volatility."

The market is closely watching additional speeches from Fed officials. Fed Governors Michelle Bowman and Adriana Kugler are scheduled to speak on the day. Attention is also focused on the earnings reports of Walt Disney, PayPal, and ARM Holdings to be released that day.

Meanwhile, the U.S. Treasury plans to auction a large amount of 10-year Treasury bonds on the day, which is expected to push long-term Treasury yields higher. This poses a burden on the stock market.

Matt Maley, chief market strategist at Miller Tabak, diagnosed, "Given strong economic data and the Fed’s less dovish remarks, some investors are concerned whether demand for (Treasury) bonds is strong enough to meet the massive supply."

Companies reporting earnings on the day include Walt Disney, PayPal, and ARM Holdings.

The U.S. 10-year Treasury yield is hovering around 4.11%, slightly up after adjustment the previous day. The 2-year Treasury yield also rose, standing at about 4.41%.

International oil prices are rising on news that U.S. crude oil production growth this year is expected to fall short of expectations. West Texas Intermediate (WTI) crude rose $0.59 (0.8%) to $73.9 per barrel. Brent crude traded up $0.58 (0.75%) at $79.18 per barrel.