Wall Street stocks open higher after Alphabet beats expectations

Shares on Wall Street rose on Wednesday as traders shrugged off worries about impending rate hikes to focus on a batch of strong earnings from tech companies.

The tech-heavy Nasdaq Composite gauge added 0.9% in early trading in New York, while the broader S&P 500 index gained 0.6%.

The moves came after Google’s parent company Alphabet followed Microsoft and Apple to report better-than-expected quarterly results, eclipsing investor jitters over a hawkish pivot from the Federal Reserve, which declined the month last to rule out a rapid rate hike to combat soaring inflation.

Shares of tech companies, which have been the big winners of the pandemic era, have fallen this year and dragged down the Wall Street stock exchanges they dominate with them, as investors adjust their valuation models to hold account of higher borrowing costs.

But U.S. shares of Alphabet rose nearly 9% in early trades on Wednesday, Facebook owner Meta added about 2% and Amazon gained 1.2%.

“These higher quality tech company results are helping to divert central bank attention and the monetary policy normalization that markets face in 2022,” said Aneeka Gupta, research director at the technology provider. WisdomTree ETFs.

“But I don’t think this market correction is over,” she added, after Wall Street’s worst January since the depths of the global financial crisis in 2009. economic growth moves away from the very high levels reached in 2021, inflation will eat away at companies’ profit margins and they will be struggling with high operating costs and higher interest rates.

The IMF has significantly lowered its 2022 growth forecasts for China and the United States. Markets have also priced in about five-quarter point hikes in the fed funds rate by the end of the year, from near zero currently. One of the central bank’s officials, Atlanta Fed Chairman Raphael Bostic, this week floated the idea of ​​an oversized half-point hike in March.

Meanwhile, new data from payroll processor ADP on Wednesday showed private sector employment in the United States fell by 301,000 jobs in January. Economists expected 207,000 jobs to have been added last month. The latest U.S. nonfarm payrolls report is due out on Friday.

The yield on the benchmark 10-year US Treasury fell about 0.03 percentage point to 1.77%. This benchmark yield, which moves inversely to the price of the government debt instrument and sets the tone for borrowing costs around the world, fell from around 1.5% at the end of the last year as the outlook for sustained inflation and higher interest rates dampened demand for fixed income securities. securities.

The German Bund’s equivalent yield, which before rising last month had been trading below zero since May 2019, held steady at 0.04% as traders awaited a response from the European Central Bank to a inflation in the euro area to new record highs.

President Christine Lagarde, who will speak at a news conference following the bank’s monetary policy meeting on Thursday, resisted pressure last month to raise the currency bloc’s main interest rate. from its historic lows. Prior to the meeting, the euro rose 0.5% against the dollar to buy just over $1.13.

In European equity markets, the regional Stoxx 600 gained 0.6%, with its technology sub-index adding 1%.

The dollar index, which measures the greenback against six major currencies, fell 0.4% as the stronger euro and positive stock market sentiment dampened demand for the safe-haven asset.

Brent, the oil benchmark, added 0.6% to $89.78 a barrel. Producer group Opec and its allies agreed on Wednesday to increase their production quota for the eighth consecutive month.

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