Stocks rose Tuesday morning as Wall Street looked past more covid lockdowns in China and instead focused on a host of strong earnings reports in a short Thanksgiving holiday trading week.
The Dow Jones Industrial Average climbed 267 points, or 0.79%. The S&P 500 and the Nasdaq Composite rose 0.66% and 0.29% respectively. Mixed earnings results led to some big stock moves – Best Buy jumped nearly 9% after the electronics retailer raised its 2023 budget outlook and beat earnings expectations, while Zoom and Dollar Tree each slid about 9% after reporting disappointing earnings and a lower-than-expected outlook, respectively.
China saw its first mainland deaths from Covid since May over the weekend. That raised fears among investors that the country could reinstate restrictions meant to slow the spread of the virus, which would hurt business. Just a week ago, the country began easing some of its strict covid measures, en route to a more flexible policy.
Reopening China would be “extremely positive for growth,” says Seema Shah, chief global strategist at Principal Asset Management
“As always, investors should watch developments with caution, as faithful execution of the reopening plan will be key to the investment outlook,” she said in a Tuesday note.
Investors also weighed comments from Federal Reserve leaders. On Monday, Cleveland Fed Chair Loretta Mester said recent inflation data was promising and she would support tapering interest rate hikes going forward. This could mean that the Fed will soon reach its terminal rate, between 4% and 5%.
“It’s a huge weight on the shoulders of investors who had absolutely nowhere to hide this year,” Phil Camporeale, managing director and asset manager at JPMorgan Asset Management, said on “Squawk. on the Street” on Tuesday.
Stocks fell on Monday, with the Dow Jones losing 45 points, while the S&P 500 and Nasdaq Composite slipped 0.4% and 1.1%, respectively. Losses on the Dow Jones were subdued by a 6.3% gain on Disney following the return of Bob Iger as CEO.
On Tuesday, several Federal Reserve officials are expected to speak, including Kansas City Fed President Esther George and St. Louis Fed President James Bullard.
Upcoming economic reports include the Philadelphia Fed Non-Manufacturing Business Outlook Survey and the Richmond Fed Manufacturing Index.
Investors are also watching earnings reports from HP Inc and Nordstrom after the bell. The exchange will be closed on Thursday for the Thanksgiving holiday and will close early on Friday.