Stocks were up slightly Wednesday morning, but the gain was minimal, as shares of tech stocks including software names were leading the market on the back of a strong earnings report from one big player.
The S&P 500 was flat at times and up about a tenth of a percentage point at other points. The index was buoyed by the components of the tech-heavy Nasdaq, which gained 0.4%. The 10-year treasury yield continues to march higher to 0.7%, as some level of bullishness combined with inflation not much higher than the interest rate pushes money out of the asset. Yields rise when prices fall.
Not much economic data hit the wires Wednesday, leaving not much for cyclical stocks to move up on. Investors are waiting to see when Congress — currently on break for the summer — will implement its new round of fiscal stimulus. Interest rates cannot fall much from here and corporations have already borrowed trillions of dollars earlier in the year. Recently, consumer confidence and recent employment trends have been poor, pointing to a choppy recovery unless fiscal stimulus is powerful again.
Banking, oil and other cyclical stocks were down.
Sure, the FAANG stocks rose, but the $120 billion by market cap Salesforce (CRM) - Get Report rose 14% to $246 a share after posting revenue of over $5 billion on its earnings report, against estimates of $4.9 billion. Strong operating leverage enabled and adjusted earnings per share beat by over 100%. Raised guidance for the full year gave investors even more confidence. Analysts are raising their price targets and mentioning the pandemic may have a hand in accelerating demand for these enterprise software services.
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