US STOCKS-Wall Street rises as small caps advance, megacaps recover ground

SGH

25/07/2024 19:41

* 
      US economic growth regains steam in Q2; inflation slows
    

        * 
      Ford slumps as higher costs, EV unit dent profit growth
    

        * 
      IBM gets boost from software, AI demand, as consulting
slips
    

        * 
      Gains for small-cap indexes Russell 2000 and S&P Small Cap
600
    

        * 
      Indexes up: Dow 0.9%, S&P 0.59%, Nasdaq 0.57%
    

  
 (Updated to 2:02 p.m. ET/1802 GMT)
    By Lisa Pauline Mattackal and David French
       July 25 (Reuters) - 
    Wall Street's main indexes climbed on Thursday, a day after
a tech-triggered sell-off, with small-cap stocks and
stronger-than-expected GDP data providing support.
  
    The small-cap Russell 2000  .RUT  jumped 2.3%, on track to
fully recoup Wednesday's broad losses. The Dow  .DJI  led the
three main benchmarks in percentage gains as investors
reassessed their recent flight to underperforming sectors.
    Most megacap stocks recovered from a shaky start and were in
positive territory at mid-afternoon. Amazon.com  AMZN.O , Apple
 AAPL.O  and Nvidia  NVDA.O  all climbed between 0.8% and 1.2%.
    While Alphabet's  GOOGL.O  shares fell 0.8%, Tesla  TSLA.O 
rose 4.5%. Lackluster earnings from the Google parent and the
electric vehicle maker had pummeled the so-called Magnificent
Seven group of tech stocks on Wednesday, prompting the Nasdaq
 .IXIC  and S&P 500  .SPX  to log their worst day since 2022.
    Gross domestic product data provided support, showing the
U.S. economy expanded 2.8% in the second quarter versus an
estimate of 2%. Inflation subsided, leaving expectations of a
September Federal Reserve interest rate cut intact.
    "We've been calling for a Goldilocks recovery, expecting the
economy to hold up, and this report shows that the economy is
actually quite strong," said Brian Klimke, chief market
strategist at Cetera Investment Management. "The Fed doesn't
necessarily need to kill growth; they're really looking to just
kill inflation."
    Bets on a 25-basis-point cut by September stood at 85.8%,
from around 78% prior to Thursday's data, CME's FedWatch Tool
showed.
    Market participants are also pricing in at least two rate
cuts by December, according to LSEG data.
    Investors now await personal consumption expenditures price
data on Friday to confirm bets of an early start to Fed rate
cuts, after the recent trend of easing inflation and some labor
market weakness.
    While heavyweight stocks have powered the market to all-time
highs this year, Wednesday's sell-off reinforced fears that
these stocks might be over-stretched and are in for more
turbulence.
    This concern has driven value investors, speeding up their
rotation into smaller-cap stocks and other sectors outside
megacap technology.
        The S&P Small Cap 600  .SPCY  rose 2.2% on Thursday.
  
    As of 2:02 p.m. ET, the S&P 500  .SPX  gained 31.81 points,
or 0.59%, at 5,458.94 points, while the Nasdaq Composite  .IXIC 
rose 103.14 points, or 0.57%, to 17,445.55. The Dow Jones
Industrial Average  .DJI  advanced 357.37 points, or 0.90%, to
40,211.24.

 
    Among earnings-driven moves, IBM  IBM.N  shares jumped 5.8%,
also boosting the blue-chip Dow, after the tech company beat
estimates for second-quarter revenue and raised the annual
growth forecast for its software business.
    American Airlines  AAL.O  rose 4.1%, reversing premarket
losses after cutting its annual profit forecast. Southwest
Airlines  LUV.N  climbed 6.8% after saying it would implement
changes including ending open seating and offering seats with
extra legroom.
        Advances by airlines and logistics firms, of 6% for 
    Old Dominion
      ODFL.O  and 6.4% for J B Hunt  JBHT.O , helped the Dow
Jones Transportation Average  .DJT  gain 2.5%. 
    Ford  F.N  slumped 17.3% after the automaker's
second-quarter adjusted profit missed estimates by a wide
margin. Edwards Lifesciences  EW.N  tumbled 29.6% after it
missed second-quarter revenue estimates.
    

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S&P500 breaks calm streak with 2%+ drop    https://tmsnrt.rs/3A8anwg
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 (Reporting by Ankika Biswas, Lisa Pauline Mattackal and Medha
Singh in Bengaluru and David French in New York; Editing by
Savio D'Souza, Saumyadeb Chakrabarty, Pooja Desai and Richard
Chang)
 ((Ankika.Biswas@thomsonreuters.com))