Stocks Extend Rally After Bank Earnings
2:45 pm Tuesday, October 18th, 2022
US stocks rose on Tuesday, extending gains from the previous session after Goldman Sachs became the latest bank to post better than expected quarterly results.
The major averages quickly fell from those levels after the 10-yr Treasury note yield breached the 4.00% level. The major averages descended until the S&P 500 tested, and found support at, the 3,700 level.
The initial rally effort was partially fueled by better-than-expected earnings results from Dow components Goldman Sachs (GS) and Johnson & Johnson (JNJ), yet it was largely driven by a technically-oriented rebound effort that spurred short-covering activity and a fear of missing out on further gains. A BofA fund manager survey showing the largest cash holdings (6.3%) since April 2001 also helped fuel a contrarian trade.
The market showed impressive resilience today, even at session lows the main indices remained in positive territory.
The stock market took a second leg higher in the last half hour or so, a move that coincided with selling pressure easing somewhat in the Treasury market. The 10-yr note yield, which hit 4.06% as the stock market reached session lows, sits at 4.02% now. The 2-yr note yield, which hit 4.48% earlier, sits at 4.44% now.
All 11 S&P 500 sectors trade in positive territory led by industrials (+2.2%), which is boosted by earnings-driven gains in Lockheed Martin (LMT). Meanwhile, energy (+0.5%) fell to the bottom of the pack as oil prices lose ground today. WTI crude oil futures are down 2.7% to $82.21/bbl.
The PHLX Semiconductor Index is underperforming today, held back in part by Intel (INTC), which is feeling the pinch of a reduced valuation for the IPO of its Mobileye unit.
Total industrial production increased 0.4% month-over-month in September (consensus 0.1%) following an upwardly revised 0.1% decline (from -0.2%) in August. The capacity utilization rate increased to 80.3% (consensus 79.9%) from an upwardly revised 80.1% (from 80.0%) in August.
