NEW YORK – U.S. stocks finished higher on Wednesday as investors weighed a fresh round of stronger-than-expected corporate earnings alongside encouraging inflation data, even as oil prices climbed amid the ongoing conflict involving Iran.
The S&P 500 gained 28.81 points, or 0.4%, to close at 7,572.40, leaving the benchmark index within 0.5% of the record high it reached early last month. The Dow Jones Industrial Average rose 150.37 points, or 0.3%, to 52,658.64, while the Nasdaq Composite advanced 162.22 points, or 0.6%, to 26,269.23.
Strong earnings from major financial companies helped support the market, while new inflation data reinforced expectations that the Federal Reserve is becoming less likely to raise interest rates at its next policy meeting.
Corporate earnings lift market sentiment
BlackRock led gains among large-cap stocks, climbing 6.6% after reporting quarterly profit and revenue that exceeded analysts’ expectations.
The asset manager said its iShares exchange-traded funds surpassed $6 trillion in assets under management during the quarter. Chief Executive Laurence Fink said the milestone represents roughly a doubling of assets over the past three years.
Bank of New York Mellon rose 5.1% after reporting stronger-than-expected quarterly results, extending a series of positive earnings releases from major U.S. banks earlier in the week.
Cintas gained 4.4% after the provider of workplace uniforms, restroom supplies and business services also reported quarterly profit above analysts’ forecasts.
Not all earnings reactions were positive. Elevance Health fell 8.5% despite reporting stronger profit and revenue than analysts had expected.
Corporate earnings are receiving heightened attention as investors look for companies to justify elevated stock valuations with stronger financial performance.
Inflation data eases pressure on the Federal Reserve
Market sentiment also benefited from another inflation report indicating that price pressures continued to moderate.
Wholesale inflation slowed to 5.5% in June from 6% in May, according to the report, coming in below economists’ expectations for acceleration. The release followed consumer inflation data published a day earlier that also showed price increases were less severe than economists had anticipated.
The softer inflation readings reduced expectations that the Federal Reserve will raise interest rates at its upcoming meeting.
According to CME Group data, traders now assign about a 10% probability of a rate increase at the next Fed meeting, down sharply from nearly 42% on Monday before the latest inflation reports were released.
New York Federal Reserve President John Williams said there are “encouraging reasons to expect that inflation has peaked and should edge down in coming quarters.”
Federal Reserve Chair Kevin Warsh, however, offered little indication of the central bank’s next move during testimony before a Senate committee. While acknowledging that recent inflation figures were moving in a favorable direction, Warsh said “these are all imperfect measures of the state of underlying inflation.”
The yield on the benchmark 10-year U.S. Treasury note fell to 4.55%, down from 4.58% late Tuesday and 4.62% earlier in the week.
Oil prices remain elevated as Middle East tensions persist
Energy markets continued to reflect concerns over the conflict involving Iran after several days of reciprocal strikes between the United States and Iran across the Middle East.
Brent crude briefly traded above $86 per barrel before easing to settle at $84.95, still up 0.3% from the previous session.
Higher oil prices could complicate the inflation outlook if sustained, even as broader inflation indicators have recently improved.
Global markets show mixed performance
Outside the United States, South Korea’s Kospi index surged 6.2%, recovering after sharp volatility earlier this month driven largely by swings in technology shares tied to enthusiasm surrounding artificial intelligence.
The benchmark had previously recorded declines of 8.9%, 7.9%, and 5.3% during the month as investors reassessed valuations of major chipmakers including Samsung Electronics and SK Hynix.
In Europe, Dutch semiconductor equipment manufacturer ASML reported quarterly revenue growth above its own forecast. Chief Executive Christophe Fouquet said continued investment in artificial intelligence prompted customers to accelerate expansion plans.
Although ASML shares listed in Amsterdam slipped 0.4%, the company’s U.S.-listed shares rose 2.2% after it projected stronger-than-expected future revenue growth.
The outlook helped ease some investor concerns that AI-related stocks had become overheated following rapid gains over the past year.
Chinese markets ended mixed after government data showed the country’s economy expanded at an annualized 4.3% rate during the latest quarter, slowing from 5% growth in the previous quarter. Hong Kong’s market gained 1.4%, while Shanghai declined 0.3%.
This report is based on reporting by The Associated Press.
Article Topics: U.S. Stocks | Corporate Earnings | Inflation | Federal Reserve | Oil Prices | BlackRock | Global Markets | AI Industry
