US STOCKS-Wall St ends first day of third quarter with relief rally

Franchise

01/07/2022 21:00

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    By Stephen Culp
    NEW YORK, July 1 (Reuters) - Wall Street rallied to close
higher on Friday in light trading,  with investors heading into
the long holiday weekend and embarking on the second half of
year looking for the next market-moving catalyst.
    All three major U.S. stock indexes reversed early losses to
end in positive territory in the wake of the stock market's
worst first half in decades.
    Still, all three indexes posted losses for the week.
    "We're headed into the holiday weekend and having a late-day
relief rally," said Joseph Sroka, chief investment officer at
NovaPoint in Atlanta. "But we’ll likely have to wait until
investors return from the holiday weekend to see if it’s
sustainable at the start of the new quarter."
    Market participants now look to the second-quarter earnings
season, the Labor Department's June employment report, and the
Federal Reserve's monetary policy meeting expected later in
July.
    The microchip sector dropped sharply after Micron Technology
Inc  MU.O  warned of cooling demand, its shares pulling the
broader semiconductor sector lower.  urn:newsml:reuters.com:*:nL1N2YI0P4  urn:newsml:reuters.com:*:nL1N2YI1GM
    Worries over waning demand in the face of decades-high
inflation were reflected in the Institute for Supply
Management's (ISM) purchasing managers' index, which showed a
deceleration in both new orders input prices.
    ISM's report seemed to back the view that the economy is
cooling and inflation appears to be past its peak. This has
raised the possibility that the Fed might have wiggle room for a
dovish pivot after its second straight 75 basis point interest
rate hike expected in July.
    "The Fed is going to need to see a lot more evidence to
change its mind about further continued interest rate hikes,"
said Tim Ghriskey, senior portfolio strategist Ingalls & Snyder
in New York. "There’s still a lot of uncertainty about the
economy and inflation despite early signs that inflation may
have peaked."
    According to preliminary data, the S&P 500
 .SPX  gained 41.01 points, or 1.08%, to end at 3,825.39 points,
while the Nasdaq Composite  .IXIC  gained 101.49 points, or
0.92%, to 11,130.23. The Dow Jones Industrial Average
 .DJI  rose 320.77 points, or 1.04%, to 31,096.20.
    Second-quarter reporting season begins in several weeks, and
130 of the companies in the S&P 500 have pre-announced. Of
those, 45 have been positive and 77 have been negative, a weaker
negative/positive ratio than a year ago, according to Refinitiv
data.
    The prospect of profit margins taking a hit from bruising
inflation and waning consumer demand will have market
participants listening closely to forward guidance.
    Analysts now expect aggregate second-quarter S&P 500
earnings growth of 5.6%, down from the 6.8% projected at the
beginning of the quarter, per Refinitiv.
    Meta Platforms Inc  META.O  fell after the Facebook parent's
CEO Mark Zuckerberg warned employees to brace for a deep
economic downturn.  urn:newsml:reuters.com:*:nL1N2YH27A
    Department store chain Kohl's Corp shares  KSS.N  tumbled
following its decision to halt talks of a possible sale to
Franchise Group  FRG.O .  urn:newsml:reuters.com:*:nL4N2YI0RF

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ISM manufacturing PMI    https://tmsnrt.rs/3NBN8M8
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 (Reporting by Stephen Culp; Additional reporting by Amruta
Khandekar and Sruthi Shankar in Bengaluru; Editing by David
Gregorio)
 ((stephen.culp@thomsonreuters.com; 646-223-6076;))