US STOCKS-Wall Street jumps as earnings gather momentum, Fed meeting nears

Spirit Realty Capital

30/10/2023 18:18

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        * 
      McDonald's rises after beating Q3 estimates
    

        * 
      Western Digital jumps on plan to separate into two cos
    

        * 
      Onsemi slips on dour Q4 rev forecast
    

        * 
      Fed meet, jobs data in focus this week
    

        * 
      Indexes up: Dow 1.53%, S&P 1.15%, Nasdaq 1.14%
    

  
 (Updated at 14:08 EDT)
    By Stephen Culp
       NEW YORK, Oct 30 (Reuters) - 
    Wall Street rallied on Monday, surging at the start of what
promises to be a hectic week marked with a heavy earnings
docket, economic data, and the Federal Reserve's two-day
monetary policy meeting and subsequent interest rate decision.
    A broad rally sent all three major U.S. stock indexes
sharply higher, a partial rebound from the previous week's
sell-off. Interest rate sensitive megacap stocks, led by
Microsoft Corp  MSFT , Amazon.com  AMZN.O , and Apple Inc
 AAPL.O  provided the most upside muscle.
    Third-quarter earnings season, firing on all cylinders, has
reached its halfway point, with 251 of the companies in the S&P
500 having reported. Of those, 78% have beaten Wall Street
estimates, according to LSEG.
    Analysts now expect, on aggregate, annual third quarter S&P
500 earnings growth of 4.3%, a marked improvement over the 1.6%
year-on-year growth seen at the beginning of October.
    "Some common themes we’re seeing is companies are adjusting
to a higher interest rate environment," said Joseph Sroka, chief
investment officer at NovaPoint in Atlanta, who also noted that
"disruption from the supply chain seems to be lessening."
    In the coming week, Caterpillar Inc  CAT.N , Apple Inc
 AAPL.OO , Pfizer Inc  PFE.N  and Starbucks Corp  SBUX.O  are
among the higher profile companies expected to post results.
    On Tuesday, the Federal Open Markets Committee (FOMC) is
expected to convene for a two-day monetary policy meeting, which
is expected to culminate in a decision to let the Fed funds
target rate stand at 5.25%-5.50%.
    The accompanying statement and Fed Chair Jerome Powell's
subsequent Q&A session will be scrutinized for clues regarding
the central bank's path forward with rates.
    "I think the Fed is going to hold interest steady on
Wednesday and the market would be looking for some indication
that they’re done raising rates for the year," Sroka added.
"Powell and the other (FOMC) members are probably content to let
the cumulative effect of past rate increases appear, and unless
there’s data contradicting the direction of inflation they’re
probably done. "
    The Bank of England and the Bank of Japan would also be
announcing rate decisions this week, with the latter set to
consider a further adjustment to its yield curve control (YCC)
framework, according to a Nikkei report.
    Closely watched economic data is on tap this week,
culminating in the U.S. Labor Department's October employment
report due on Friday.
    Geopolitical strife arising from the Israel-Hamas conflict
as well as a surge in Treasury yields have weighed on stocks in
recent weeks, dragging the benchmark S&P 500  .SPX  down about
10% from its intraday high in July.
    The Dow Jones Industrial Average  .DJI  rose 495.88 points,
or 1.53%, to 32,913.47, the S&P 500  .SPX  gained 47.33 points,
or 1.15%, to 4,164.7 and the Nasdaq Composite  .IXIC  added
144.02 points, or 1.14%, to 12,787.04.
    All 11 major sectors of the S&P 500 were green, with
communication services  .SPLRCL  enjoying the biggest percentage
gain.
    McDonald's  MCD.N  reported better than expected quarterly
results, driven by demand for its more affordable food as
consumers contend with ongoing inflation pressures. Its shares
gained 2.2%.
    Onsemi  ON.O  tumbled 19.5% after the chipmaker forecast
weak fourth-quarter revenue on slowing demand for electric
vehicles.
    Western Digital Corp  WDC.O  jumped 7.8% after the company
disclosed plans to separate itself into two independent public
companies.
    Realty Income  O.N  slid 5.6% following its announcement
that it would by Spirit Realty Capital  SRC.N  in an all-stock
deal valued at $9.3 billion. Spirit Realty Capital advanced
8.1%.
    Advancing issues outnumbered declining ones on the NYSE by a
1.94-to-1 ratio; on Nasdaq, a 1.59-to-1 ratio favored advancers.
    The S&P 500 posted no new 52-week highs and 44 new lows; the
Nasdaq Composite recorded 13 new highs and 321 new lows.

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 (Reporting by Stephen Culp; Additional reporting by Amruta
Khandekar and Shashwat Chauhan in Bengaluru; Editing by David
Gregorio)
 ((stephen.culp@thomsonreuters.com; 646-223-6076;))