NEW YORK: Wall Street ended sharply higher on Wednesday (Aug 3), with strong profit forecasts from PayPal and CVS Health Corp lifting sentiment and helping elevate the Nasdaq to its highest level since early May.
The Dow Jones Industrial Average finished up 1.3% at 32,812.50. The broad-based S&P 500 advanced 1.6% to 4,155.17, while the tech-rich Nasdaq Composite Index jumped 2.6% to 12,668.16.
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.
Data showed the US 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.
Among individual companies, Starbucks gained 4.3% as it reported record quarterly revenues on strong sales in North America that offset the drag from China Covid-19 restrictions.
Moderna surged 16% as the vaccine maker reported better-than-expected quarterly results and announced a new US$3 billion share repurchase plan.
Apple and Amazon 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 US$2 billion stake in the financial technology firm.
CVS Health gained 6.3% after the largest US 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. – Reuters, AFP