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Nasdaq ends at three-month high as PayPal fuels optimism

Stock Markets Aug 03, 2022 06:31PM ET
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2/2 © Reuters. Traders work on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., August 2, 2022. REUTERS/Andrew Kelly 2/2

By Noel Randewich

(Reuters) - Wall Street ended sharply higher on Wednesday, with strong profit forecasts from PayPal (NASDAQ:PYPL) and CVS Health Corp (NYSE:CVS) lifting sentiment and helping elevate the Nasdaq to its highest level since early May.

Data showed the U.S. services industry unexpectedly picked up in July amid strong order growth, while supply bottlenecks and price pressures eased. That supported views that the economy was not in recession despite output slumping in the first half of the year.

A fresh batch of strong results from companies including PayPal and CVS Health Corp boosted sentiment in a largely upbeat quarterly reporting season. Reports exceeding low expectations have helped Wall Street rebound from losses caused by worries about decades-high inflation, rising interest rates and shrinking economic output.

"We're going through Q2 earnings and, by and large, from the tech complex to consumer discretionary and industrials, we're seeing a lot of better-than-feared prints, and that's just good enough right now," said Sahak Manuelian, managing director of trading at Wedbush Securities in Los Angeles.

Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) rallied almost 4%, while Facebook-owner Meta Platforms jumped 5.4%.

PayPal soared almost 10% after it raised its annual profit guidance and said activist investor Elliott Management had an over $2 billion stake in the financial technology firm.

CVS Health gained 6.3% after the largest U.S. pharmacy chain raised its annual profit forecast after posting strong quarterly results.

Manuelian said an additional factor behind Wednesday's stock rally was growing confidence among investors that the Fed has already carried out the bulk of the interest rate hikes that will be necessary to bring inflation under control.

Meanwhile, Richmond Federal Reserve President Thomas Barkin on Wednesday joined policymakers saying that the U.S. central bank is committed to getting inflation under control and returning it to its 2% target.

The S&P 500 climbed 1.56% to end the session at 4,155.12 points.

The Nasdaq gained 2.59% to 12,668.16 points, while Dow Jones Industrial Average rose 1.29% to 32,812.50 points.

Additional data on Wednesday showed new orders for U.S.-manufactured goods increased solidly in June and business spending on equipment was stronger than initially thought, pointing to underlying strength in manufacturing despite rising interest rates.

Wall Street's busiest trades - https://fingfx.thomsonreuters.com/gfx/mkt/jnvweneadvw/SPX_by_busiest_trades.png

The most traded stock in the S&P 500 was Tesla (NASDAQ:TSLA), with $24.3 billion worth of shares exchanged during the session. Its shares rose 2.27%.

Of the 11 S&P 500 sector indexes, 10 rose, led by information technology, up 2.69%, followed by a 2.52% gain in consumer discretionary.

The S&P 500 has rebounded about 13% from its closing low in mid-June and would have to climb another 15% to get back to its record high close in early January.

Moderna (NASDAQ:MRNA) Inc surged about 16% after the vaccine maker announced a $3 billion share buyback plan.

Regeneron (NASDAQ:REGN) Pharmaceuticals climbed 5.9% after it beat quarterly revenue estimates, while coffee chain Starbucks Corp (NASDAQ:SBUX) rose over 4% after it reported upbeat quarterly profits.

Advancing issues outnumbered falling ones within the S&P 500 by a 3.7-to-1 ratio. The S&P 500 posted two new highs and 30 new lows; the Nasdaq recorded 51 new highs and 37 new lows.

Volume on U.S. exchanges was relatively heavy, with 11.7 billion shares traded, compared to an average of 10.7 billion shares over the previous 20 sessions.

Nasdaq ends at three-month high as PayPal fuels optimism
 

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Comments (39)
Mangalavati Citra
Mangalavati Citra Aug 04, 2022 4:04AM ET
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Statistically the market rallies higher just before a recession. Be careful!
Nils Hullmann
Nils Hullmann Aug 04, 2022 4:04AM ET
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next definition of recession forged by Brandonomics 7 consecutive quarters of negative gdp
Tre Hsi
Tre Hsi Aug 04, 2022 4:04AM ET
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Nils Hullmann  is that like Trump saying back in 2016 that real unemployment rate was 42%?
Kerry Ditto
Kerry Ditto Aug 03, 2022 4:03PM ET
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100 bps hike is now a sure thing
Jeff Gordon
Jeff Gordon Aug 03, 2022 4:03PM ET
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no way. you'll see a large decrease in inflation next week and higher unemployment. I think the Fed will not ever raise at all in September and hold. Mark these words.
Steffen vdm
Steffen vdm Aug 03, 2022 3:41PM ET
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inflation up = PayPal profits up. Not an optimistic sign for me
First Last
First Last Aug 03, 2022 3:41PM ET
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What are the optimistic signs for you?
Steffen vdm
Steffen vdm Aug 03, 2022 3:41PM ET
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initial jobless claims going down (rising as we speak), stable trade balance (currently downtrend), PMI rising (currently downtrend), CPI/inflation going down (not happening), inflation adjusted spending (not going great), rising GDP (nope), and there are more indicators telling me something different than what the markets want to make us believe
First Last
First Last Aug 03, 2022 3:41PM ET
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Trade balance has been improving since March 2022.  I didn't check the other metrics, but some of them have also been improving.
Steffen vdm
Steffen vdm Aug 03, 2022 3:41PM ET
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I prefer to look at the trade balance over a longer period. From 2017 to mid 2020 it was fairly stable. From that point onward, the situation has worsened significantly. Up from March indeed but I am not convinced yet with what is going on in the world right now (Ukraine, Taiwan...)
Tre Hsi
Tre Hsi Aug 03, 2022 3:41PM ET
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Steffen vdm  "trade balance over a longer period. From 2017 to mid 2020 it was fairly stable."  -- so US trade deficit didn't go down during that time?  I thought President Orange said he won the trade war???
Kerry Ditto
Kerry Ditto Aug 03, 2022 3:34PM ET
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100 bps?
First Last
First Last Aug 03, 2022 3:33PM ET
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People who never understood the definition of official recession should have no opinions on if it's changed.
Nils Hullmann
Nils Hullmann Aug 03, 2022 3:33PM ET
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we all know how the headlines of leftwing Media would have been if trump had been president.....so stop the sharade.....trump recession 24/7....you really think Dems voter but your lie ? it will do more harm than good
carlos guo
carlos guo Aug 03, 2022 3:18PM ET
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Don't worry, we are not in a "recession" because the Brandon administration has changed the definition of "recession". A "recession" is now more of a feeling, basically defined as "whenever a Republican is in office", so it cannot be a recession when a democrat is in office. The same way as democrats now let "woman" and "man" not have real definitions, but are more based on whatever you feel. Similarly, the difference between the BLM "protests" and January 6th "insurrection" is based on who is doing it. When democrats call for violence again Supreme Court justices it is "women's rights movement" and when Trump tells people to peacefully march it is "conspiracy to violently overthrow the government". Now everybody be sure to go get your fifth COVID vaccine, of course "vaccine" now being defined as "experimental pharmaceutical that does not prevent you from getting or spreading the virus and wears off after a few months". Definitely not living in 1984.
Tre Hsi
Tre Hsi Aug 03, 2022 3:18PM ET
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Now everybody be sure to go get your fifth COVID vaccine, of course "vaccine" now being defined as "experimental pharmaceutical that does not prevent you from getting or spreading the virus and wears off after a few months".  --- does your Dear Leader know you are talking trash about his Trump vaccine???  so Operation Warp Speed didn't work???
Kris Jay
Kris Jay Aug 03, 2022 3:15PM ET
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yea!  Rates are higher, Fed is in QT,  Europe and China both forecast slower growth, just had the biggest drop since 1970 in market followed by the best month (July) in market history,  Italy going bankrupt need ECB to bail them out a la Greece, all countries top heavy with older people and not enough young people, gas still nearly $5/gal,  Russia still in Ukraine,  China saber rattling, BMW, CAT, AMD, Walmart and a host of others all seeing a softening in sales for Q3 and Q4,   Credit card debt in June has risen the fastest ever but YEA, I want to pay 45-60 times next years earnings!!  Yea 5000 S&P coming!
Brad Albright
Brad Albright Aug 03, 2022 3:15PM ET
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You make a good case.
G D
G D Aug 03, 2022 3:15PM ET
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Well said Kris.
Dave Jones
Dave Jones Aug 03, 2022 3:14PM ET
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It's just completely detached itself from reality. So no recession is good news but what about the interest rate increases? Aren't they going to stop because of the slowing economy? Which story is it?
First Last
First Last Aug 03, 2022 3:14PM ET
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Maybe not stop, just slow the rate increases.
Bradley Jeko
Bradley Jeko Aug 03, 2022 3:14PM ET
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Exactly. Which is it? They cherry-pick data points to throw in these “news” articles, to support whatever narrative their WS handlers want them to push.
Mohammed Ali
Mohammed Ali Aug 03, 2022 3:11PM ET
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what a joke , listen to experts and do just the opposite,if they tell sell- buy.if they say buy then sell.it sounds foolish but this is hard reality.
soho electronics
soho electronics Aug 03, 2022 3:11PM ET
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totally agree
First Last
First Last Aug 03, 2022 3:11PM ET
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Stop listening to what they say and watch what they do.
Kat Barry
Kat7 Aug 03, 2022 3:10PM ET
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Corporate maneuvering as usual. They run/own this country,
 
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