Wall Street extends July rebound, led by tech, energy

  • US stocks rise in early trade led by Apple, Exxon
  • US crude rose more than 5 percent
  • US dollar index falls

July 29 (Reuters) – US stocks extended their July rebound on Friday with losses in the dollar and some Treasury yields, as traders acted on positive corporate news despite a rise in labor costs and other inflation indicators.

Positive forecasts from Apple Inc (AAPL.O) and Amazon.com Inc (AMZN.O) showed resilience in mega-cap companies to survive an economic slowdown, with hopes of a less aggressive monetary policy boost.

The two largest US oil companies, Exxon Mobil (XOM.N) and Chevron Corp (CVX.N), also posted record revenue on Friday from rising crude oil and natural gas prices.

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The Nasdaq Composite (.IXIC) rose 115.75 points, or 0.95%, to 12,278.34, and the S&P 500 (.SPX) rose 29.06 points, or 0.71%, to 4,101.49. The Dow Jones Industrial Average (.DJI) rose 78.8 points, or 0.24%, to 32,608.43.

US labor costs rose strongly in the second quarter as a tight job market continued to fuel wage growth, which could keep inflation high for some time.

The US Commerce Department said on Friday that consumer spending, which contributes more than two-thirds to US economic activity, also rose 1.1% last month.

As inflation picks up in major markets and central bankers scramble to raise rates without killing growth, riskier markets such as stocks have reacted positively to any perceived softening on the part of policymakers.

Thursday’s data showed the US economy shrank in the second quarter, with stocks rising as traders’ bet rates would move more slowly. Meanwhile, euro zone numbers on Friday beat expectations, yet fears of a recession are rising as energy inflation continues to warp in Ukraine.

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Strategists at Wells Fargo Investment Institute wrote in a note on Thursday, “We are of the view that earnings for all equity classes will peak in 2022 and decelerate as the economy weakens, revenue growth stalls and input costs rise.” “

The MSCI World Index (.MIWD000000PUS) was up nearly 0.8%, on course for its best month since November 2020, buoyed by broad gains in European markets, with the STOXX Europe 600 (.STOXX) up nearly 1.26%.

Despite a positive end to the month for stocks, Mark Heifel, chief investment officer at UBS Global Wealth Management, said investors should proceed with caution.

“In the near term, we think the risk-reward for the broader equity index will be muted. Equities are pricing in a ‘soft landing’, yet the risk of a deep ‘recession’ in economic activity has increased. “

After Beijing dropped references to its full-year GDP growth target after a high-level Communist Party meeting, some of the concern was evident in Asian stock markets overnight. read more

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell 0.5%.

The yield on the benchmark 10-year notes declined to 2.6469% from 2.681% late on Friday, amid contracting US GDP. But Treasury yields rose at the low end on Friday after data on labor costs and wage growth pushed up inflation. The yield of 2-year note increased from 2.877% to 2.8905%.

The US dollar rebounded from a three-week low in choppy trading on Friday, as rounds of US economic data suggested more inflation – and higher interest rates. The dollar was down about 0.2% against a basket of its major peers — still up for a second month’s gain. read more

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Futures markets now predict that US interest rates will peak by December this year instead of June 2023, and the Federal Reserve will cut interest rates by about 50 bps next year to support slower growth. [0#FF:]

Bank of America economist Ethan S. “Strong hiring and a fall in GDP means a sustained collapse in productivity. The labor market should soon slow down,” Harris and Aditya Bhave wrote in a note on Friday. “The Fed is likely to respond slowly to the recession. We think the market optimism about a dovish Fed pivot is premature.”

Across commodities, Brent crude futures rose nearly 3%, while US West Texas Intermediate crude added more than 5% in early gains as concerns about supply crunch ahead of the next meeting of OPEC ministers. removes. read more

Spot gold rose nearly 0.5% to $1,765 an ounce, a more than three-week high, supported by a softer dollar and bets that the Federal Reserve could cool the pace of rate hikes as economic risks deepen. Is.

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Reporting by Lawrence Delevingne in Boston and Simon Jessop in London; Editing by Mark Heinrich and Nick Ziminsky

Our Standards: Thomson Reuters Trust Principles.

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