Dow Futures Waver, Bond Yields Higher—and What Else Is Happening in the Stock Market Today

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Corporate earnings season is kicking into high gear this week.

Ed Jones/AFP via Getty Images

The major stock indexes were gaining Tuesday, as earnings season kicked into high gear. Reports have been better than expected, but the market also seems to be in dip-buying mode.

In midday trading, the Dow Jones Industrial Average was up 390 points, or 1.1%, after the index retreated 39 points on Monday. The S&P 500 rose 1.3%, while the Nasdaq Composite added 1.8%.

There wasn’t much news about the war in Ukraine or the state of the econommony, and movements in other key assets like bonds and commodities were muted, “so that leaves earnings as the most likely near-term influence [for stocks],” wrote Tom Essaye, founder of Sevens Report Research. 

Companies representing about a tenth of the S&P 500’s market capitalization have reported earnings so far, and the aggregate earnings-per-share result has beaten expectations by just over 8%, according to Credit Suisse. But that isn’t necessarily what is moving the stock market higher, even if investors expect more strong earnings.

Stocks are increasingly seen as expensive as bond yields have moved higher, which means companies will need to beat earnings estimates by an even greater margin to push their stocks significantly higher. As of Monday morning, the average post-reporting move in stocks of S&P 500 companies that turned in earnings beats was slightly weaker than for the index itself, according to Wells Fargo.

Truist Financial Corp. (ticker: TFC) stock, for example, dropped 1.5% after the company reported a profit of $1.23 a share, beating estimates of $1.11 a share, on sales of $5.3 billion, below expectations for $5.5 billion.  

Lockheed Martin (LMT) posted a profit of $6.44 a share, beating estimates of $6.19 a share, on sales of $15 billion, below expectations for $15.5 billion. The stock fell 1.1%. 

There was at least one standout after earnings, though, that was helping boost the S&P 500. Johnson & Johnson (JNJ) stock gained 2.9% after reporting better earnings than forecasted. That brought other healthcare stocks up, with Medtronic (MDT) gaining 1.6%. The Health Care Select Sector SPDR Exchange-Traded Fund (XLV) rose 0.6%. The healthcare sector is the second -argest by market value in the S&P 500, representing about 14% of the index’s total market capitalization.  

Aside from earnings, investors seem to be in dip-buying mode. The S&P 500 hds fallen 7.8% from the start of the year to Monday’s close. And measures of sentiment on the market hit a multi-decade low, noted Marko Kolanovic, chief global markets strategist at JPMorgan, who wrote that some institutional investors have been buying up stocks recently. Usually, when so much pessimism abounds, investors only get more optimistic from there.  

Still, the bond market is a headwind for stocks. The 10-year Treasury yield hit a new pandemic-era high, at 2.91%. It’s not up much from Monday’s closing level of 2.86%, but overall it could make equities unattractive enough to remove some buying interest from the stock market soon. The yield is now approaching the long-term average annual inflation expectations of 2.92%. 

This comes after Federal Reserve Bank of St. Louis President James Bullard said that he wouldn’t rule out an interest rate hike of 75 basis points, or hundredths of a percentage point, rather than the expected 50 basis-point hike, as the Fed tries to rein in inflation. The Fed is also expected to soon start reducing its bondholdings, which is weighing on the price of Treasury debt, sending yields higher. 

Overseas, the pan-European Stoxx 600 fell 0.8% as investors across the region returned from a holiday on Monday. Tokyo’s Nikkei 225 rose 0.7%.

The cryptocurrency space, meanwhile, has seen a volatile 24 hours, with Bitcoin—the largest digital asset—dropping below $39,000 at points on Monday. Bitcoin prices were up 4% over the past day to near $41,000, with smaller peer ether near 5% higher to around $3,050.

Here are seven stocks on the move Tuesday:

Halliburton (HAL) stock was up 0.3% after the company reported a profit of 35 cents a share, compared with estimates of 34 cents. Sales were $4.28 billion, above expectations for $4.2 billion. 

J.B. Hunt Transport Services (JBHT) stock initially dipped, then rose 1.3% after the company reported a profit of $2.29 a share, beating estimates of $1.94 a share. Sales were $3.5 billion, above expectations for $3.3 billion.

Pool Corp. (POOL) stock gained 4.5% after getting upgraded to Buy from Neutral at Longbow.

Delta Air Lines (DAL) stock rose 3% after a federal judge struck down the mask requirement for travelers on airplanes and other forms of public transit on Monday. United Airlines (UAL) rose 4.%, with Southwest Airlines (LUV) up 2.2%.

Stellantis (STLA) rose 3.2% after the auto maker behind brands including Dodge, Chrysler, and Fiat said it would halt output at a factory near Moscow to ensure compliance with sanctions on Russia.

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com and Jack Denton at jack.denton@dowjones.com