Stocks surge as corporate earnings help investors shrug off recession fears
By Liz Moyer
Investing.com -- U.S. stocks surged in morning trading on Wednesday as investors tried to put worries about a possible recession in their rearview mirror.
At 11:06 ET (16:06 GMT), the Dow Jones Industrial Average rose 554 points, or 1.7% while the S&P 500 rose 1.6% and the NASDAQ Composite was up 1.8%.
Nike Inc (NYSE: NKE) shares rose 13% after the athletic apparel maker reported better than expected results and said consumer demand remained strong as it continues to make progress with its inventory issues. Corporate results that beat expectations are helping to ease concerns about inflation and rising interest rates.
On Tuesday, stocks broke a four-day losing streak on optimism about corporate earnings. As the year draws to a close, stocks are still on a path to record their worst year since 2008 after three years of gains. The S&P is down more than 18% so far this year. The tech-heavy Nasdaq is down more than 31%.
Inflation is weighing on growth stocks as the Federal Reserve raises interest rates to try and tame it. Last week, the central bank signaled it will keep rates higher for longer and indicated it would raise its benchmark rate above 5% next year.
The Fed is determined to tame inflation, but investors have worried in recent weeks that its aggressive stance could tip the economy into a recession.
Existing home sales were softer than expected in November, the 10th month of declines. Sales fell 7.7% to an annualized 4.09 million, versus expectations for 4.17 million. The Conference Board’s consumer confidence reading was higher than expected, coming in at 108.3 in December.
Nike’s strong showing is lifting other retail stocks. Shares of Lululemon Athletica Inc (NASDAQ: LULU) rose 3.7% and shares of Under Armour Inc A (NYSE: UAA) rose 6.1%.
Oil rose. Crude Oil WTI Futures was up 2.7% to $78.33 a barrel, while Brent Oil Futures crude rose 2.6% to $82.03 a barrel. Gold Futures rose 0.1% to $1,827.