US STOCKS-Wall Street ends first day of third quarter with solid rebound

Franchise

01/07/2022 21:23

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    * U.S. factory activity decelerates more than expected in
June
    * Micron's downbeat forecast prompts chip sell-off 
    * Kohl's tumbles after calling off sale to Franchise Group
    * Indexes up: Dow 1.05%, S&P 1.06%, Nasdaq 0.90%

 (New throughout, updates with official closing prices, volume,
sector performance)
    By Stephen Culp
    NEW YORK, July 1 (Reuters) - Wall Street bounced back to a
sharply higher close in light trading on Friday as investors
embarked on the second half of the year ahead of the long
holiday weekend.
    All three major U.S. stock indexes reversed early losses to
end in well into 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.  urn:newsml:reuters.com:*:nL1N2YI0P4
    Micron's shares slid 2.9%, pulling the Philadelphia SE
Semiconductor index  .SOX  down 3.8%.  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."
    The Dow Jones Industrial Average  .DJI  rose 321.83 points,
or 1.05%, to 31,097.26, the S&P 500  .SPX  gained 39.95 points,
or 1.06%, to 3,825.33 and the Nasdaq Composite  .IXIC  added
99.11 points, or 0.90%, to 11,127.85.
    All 11 major sectors of the S&P 500 ended the session green,
with utilities  .SPLRCU  enjoying the largest percentage gain.
    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.
    Department store chain Kohl's Corp shares  KSS.N  tumbled
19.6% following its decision to halt talks of a possible sale to
Franchise Group  FRG.O .  urn:newsml:reuters.com:*:nL4N2YI0RF
    Advancing issues outnumbered declining ones on the NYSE by a
2.77-to-1 ratio; on Nasdaq, a 1.57-to-1 ratio favored advancers.
    The S&P 500 posted one new 52-week high and 48 new lows; the
Nasdaq Composite recorded 12 new highs and 219 new lows. 
    Volume on U.S. exchanges was 11.01 billion shares, compared
with the 12.88 billion average over the last 20 trading days.

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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;))