Wall Street jumps as earnings gain momentum and Fed meeting approaches

NEW YORK (Reuters) – U.S. stocks rose on Monday at the start of what will be a hectic week marked by a big earnings schedule, economic data, the Federal Reserve’s two-day monetary policy meeting and subsequent interest rates. Rate resolution.

The broad rally sent the three major US stock indexes sharply higher, a partial rebound from last week’s sell-off. Major interest rate-sensitive stocks, led by Microsoft Corp, Amazon.com (AMZN.O) and Apple Inc (AAPL.O), achieved the greatest strength in the rise.

The third-quarter earnings season, in full swing, has reached the halfway point, with 251 S&P 500 companies reporting earnings. Of those, 78% beat Wall Street estimates, according to LSEG.

In aggregate, analysts now expect S&P 500 third-quarter annual earnings to grow by 4.3%, a marked improvement over the 1.6% annualized growth seen at the beginning of October.

“Some of the common themes we’re seeing are companies adjusting to a higher interest rate environment,” said Joseph Sroka, chief investment officer at NovaPoint in Atlanta, who also noted that “disruptions to the supply chain appear to be less.”

Next week, Caterpillar Inc (CAT.N), Apple Inc, Pfizer Inc (PFE.N), and Starbucks Corp (SBUX.O) will be among the notable companies expected to report results.

The Federal Open Markets Committee (FOMC) is expected to meet on Tuesday for a two-day monetary policy meeting, which is expected to culminate in a decision to allow the federal funds rate target to remain at 5.25%-5.50%.

The accompanying statement and subsequent question-and-answer session from Fed Chair Jerome Powell will be scrutinized for clues about the central bank’s path forward on interest rates.

“I think the Fed will hold interest rates steady on Wednesday and the market will be looking for some indication that they are done raising rates for the year,” Sroka added. “Powell and members of the FOMC are likely to be satisfied that the cumulative effect of previous interest rate increases has emerged, and unless there is data that contradicts the inflation trend that is likely to be the case.”

The Bank of England and the Bank of Japan will also announce interest rate decisions this week, with the latter set to consider further adjustment to the yield curve control (YCC) framework, according to the Nikkei report.

Closely watched economic data will be released this week, culminating with the US Labor Department’s October employment report scheduled for release on Friday.

Geopolitical strife stemming from the conflict between Israel and Hamas, as well as a rise in Treasury yields, have weighed on stocks in recent weeks, pushing the S&P 500 (.SPX) down about 10% from its intraday high in July.

The Dow Jones Industrial Average rose 495.88 points, or 1.53%, to 32,913.47 points, the S&P 500 Index rose 47.33 points, or 1.15%, to 4,164.7 points, and the Nasdaq Composite Index rose 144.02 points, or 144.02 points. 1.14% to 12787.04.

All 11 major sectors in the S&P 500 were green, with Communications Services (.SPLRCL) gaining the most.

McDonald’s Corp (MCD.N) reported better-than-expected quarterly results, driven by demand for its more affordable foods as consumers face persistent inflation pressures. Its shares rose 2.2%.

Onsemi (ON.O) shares fell 19.5% after the chipmaker expected weak revenues in the fourth quarter due to slowing demand for electric cars.

Western Digital Corp. (WDC.O) shares jumped 7.8% after the company revealed plans to separate itself into two independent public companies.

Realty Income (ON) fell 5.6% after announcing it would sign with Spirit Realty Capital (SRC.N) in an all-stock deal worth $9.3 billion. Spirit Realty Capital shares advanced 8.1%.

Advancing issues outnumbered declining issues on the NYSE by a ratio of 1.94 to 1; On the Nasdaq, a 1.59-to-1 ratio favored rising stocks.

The S&P 500 has no new 52-week highs and 44 new lows; The Nasdaq Composite recorded 13 new highs and 321 new lows.

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