Stock market today: Dow rises 200 points as earnings rise

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The Dow rose about 200 points on Tuesday as markets pointed to a broader rebound despite lower bond yields and rising tensions in the Middle East.

The Dow Jones Industrial Average (^DJI) rose about 0.6%, snapping a six-session losing streak. The S&P 500 (^GSPC) hugged the flatline, while the tech-heavy Nasdaq Composite (^IXIC) fell nearly 0.1%.

A more upbeat tone comes as earnings reports pour in before the bell. Shares of UnitedHealth ( UNH ) added nearly 7% after the healthcare group beat quarterly profit estimates, also saying it expected to take a $1.6 billion hit from the February cyberattack.

Investors are also digesting big bank results: Bank of America ( BAC ) reported first-quarter profit fell 18% year-on-year, a key revenue source weakened, while Morgan Stanley ( MS ) stock beat estimates. Elsewhere, BNY Mellon ( BK ) posted a profit beat, while Johnson & Johnson ( JNJ ) reported a loss in earnings. Also on the docket are the results of United Airlines ( UAL ).

Stocks posted significant losses on Monday as tepid retail sales data fueled expectations that interest rates may be longer this year. The consensus now is for an interest rate cut until September as the strength of the economy gives the Federal Reserve reason to take its time, but some believe politics could force policymakers to act sooner.

Bond yields continued to rise after the 10-year Treasury yield (^TNX) hit 2024 highs on Monday. The yield was up about 4 basis points at around 4.66% early on Tuesday.

With rising tensions in the Middle East still bubbling in the background, investors are watching how Israel decides to respond to Iran’s weekend attack as allies seek military restraint.

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  • Stocks eye comeback

    The Dow rose about 200 points on Tuesday as markets pointed to a broader rebound despite lower bond yields and rising tensions in the Middle East.

    The Dow Jones Industrial Average (^DJI) rose about 0.6%, snapping a six-session losing streak. The S&P 500 (^GSPC) hugged the flatline, while the tech-heavy Nasdaq Composite (^IXIC) fell nearly 0.1%.

    Bond yields continued to rise after the 10-year Treasury yield (^TNX) hit 2024 highs on Monday. The yield was up about 4 basis points at around 4.66% early on Tuesday.

  • Chatting Interest Rates and Markets with the CEO of BNY Mellon

    I had a nice post-earnings chat with BNY Mellon (BK) CEO Robin Vince (they reported this morning, the stock was up 2% pre-market).

    I appreciate his thoughts on rates and markets (below. I take them as inflation!

    “When I think about the path of interest rates, there are a few things going on in the world. Clearly, we’ve got the geopolitical risks out there and the potential escalation that continues today [Israel/Iran] Conflict – This is definitely a risk. We have sustained, relatively high inflation in the US, and that is obviously some risk. So that brings the path of interest rates into some question. We have had and continue to face economic challenges in the US [high] Total issuance of US Treasuries from a volumes point of view. That’s great for our business, but as a citizen and taxpayer, you should be a little concerned about the path to debt sustainability in the United States. So there’s a lot going on.

    Now, I’ll give you the flip side as well because what we see is a really strong, underlying US economy, and that’s not to say that we won’t have a correction in the stock market at some point — that’s going to be good. That’s not to say we haven’t had a recession at some point. It is inevitable at some point. But when you look at the advantages that the US currently has, it has very significant advantages on a relative basis in the world. It is a great destination for investment. You can hear from CEOs internationally. You can see this with investors putting their money into the United States, you can see the performance of the stock market, and there are a lot of tailwinds coming into the markets right now. So I would say it is a place where you should be prepared for all eventualities. Could we see the Fed on hold, maybe? Will We See The Fed Cut Rates This Year? Maybe. Could we see the Fed hike rates? Not impossible. You have to be prepared, but at the same time, the underlying direction for US travel is very positive.

  • Get those Starbucks earnings

    Starbucks ( SBUX ) earnings are due in a few weeks, and the note I took suggests the report could be ugly.

    Much of the concern over Starbucks right now stems from declining store traffic in the US, as the prices of what Starbucks sells have gone through the roof. I paid $7 for a venti cold brew at the NYC store a week ago (I’m cutting back on trips to Starbucks)!

    Bernstein hit store traffic this morning with a brand new look, and it’s not pretty.

    Starbucks shares Year to date: -11.3%.

    Ice cold traffic trend at Starbucks.

    Ice cold traffic trend at Starbucks. (Bernstein)

  • Markets morning quote….

    Stock futures were all over the map this morning after Monday’s hot retail sales report slowed.

    Looking at how the macro data trended in April, investors are still holding out hope for a June interest rate cut.

    I think JPMorgan’s strategy team will provide a good blunt take on the markets this morning.

    “For a market dependent on immaculate disinflation, a dovish Fed reaction function and declining tail risks on growth, continued tepid growth and inflation data, a tight stock v bond risk premium will eventually lead to a tipping point that will produce a market correction. Inflation risks will also increase due to geopolitical developments related to Russia. And in addition, investor positions have reached historic lows.

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