Stocks rose Tuesday morning as Wall Street looked past more China covid lockdowns and instead focused on a host of strong earnings reports during a short week of trading for the Thanksgiving holiday.
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 a few big stock moves – Best Buy popped nearly 9% after the electronics retailer hiked its 2023 fiscal outlook and beat earnings expectations, while Zoom and Dollar Tree each slipped about 9% after reporting disappointing earnings and a lower-than-expected outlook, respectively.
China saw its first deaths in the mainland from Covid since May over the weekend. It prompted fears among investors that the country could bring back restrictions meant to slow virus spread, which would hurt business. Just a week ago the country began to ease some of its tight covid measures, on its way to a looser policy.
China reopening would be “extremely growth positive,” according to Seema Shah, chief global strategist at Principal Asset Management
“As ever though, investors should cautiously monitor developments 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 President Loretta Mester said recent inflation data is promising and that she’d support reduced interest rate hikes going forward. That could mean that the Fed gets to its terminal rate, between 4% and 5%, soon.
“That’s a huge weight off the shoulders of investors that have had absolutely nowhere to hide this year,” said Phil Camporeale, managing director and asset manager at JPMorgan Asset Management on Tuesday’s “Squawk on the Street.”
Stocks fell Monday, with the Dow losing 45 points, while the S&P 500 and Nasdaq Composite slid 0.4% and 1.1%, respectively. Losses on the Dow were kept in check by a 6.3% gain in Disney following the return of Bob Iger as CEO.
On Tuesday, several Federal Reserve officials are set to speak, including Kansas City Fed President Esther George and St. Louis Fed President James Bullard.
Economic reports due out include the Philadelphia Fed’s nonmanufacturing business outlook survey and the Richmond Fed’s manufacturing index.
Investors are also watching for earnings reports from HP Inc and Nordstrom after the bell. The stock market will be closed on Thursday for the Thanksgiving holiday and will close early on Friday.