Stocks rose Tuesday, with tech leading the way, but earnings across the board coming in with strength. Still, not all sectors performed well.
The S&P 500 rose 0.45%, lifted by the tech-heavy Nasdaq, up 0.8%. The 10-Year Treasury yield, pressured of late, did fall to 0.58%. Yields fall when prices rise.
Most FANG stocks rose about 1%, but so did semiconductors, which comprise a decent portion of the major indices. The iShares PHLX Semiconductor ETF (SOXX) - Get iShares PHLX Semiconductor ETF Report rose 1.2% as Advanced Micro Devices (AMD) - Get Advanced Micro Devices, Inc. Report rose 12% after posting an exceptionally strong quarter and guided for 2020 revenue growth of above 30%, a raised estimate. While AMD’s quarter and outlook are a good sign for chip sales and end markets, analysts say AMD is taking market share from Intel (INTC) - Get Intel Corporation (INTC) Report.
Starbucks (SBUX) - Get Starbucks Corporation Report posted a less-severe-than-expected sales decline and a narrower net loss. The company also surpassed analysts expectations for same-store-sales for the current quarter and guided for a profit. The stock rose 4.4%. This signifies the company is on a clear path back towards growth. Other consumer discretionary stocks rose, with the S&P 500 Equal Weight Consumer Discretionary Index up more than 1%.
Other cyclical sectors like oil and banking were up a tick in premarket trading, before falling into the red when trading began. Weakness in cyclical sectors has been a theme of late, even as $1 trillion of fiscal stimulus may be on the way, in the face of paused state reopenings and a spreading virus. Investors are wary of the effectiveness of the new bill, while a vaccine is also needed soon.
“The US earnings continue coming in. So far, the second quarter results have beaten the analyst expectations by 15%,” wrote Ipek Ozkardeskaya, senior analyst at Swissquote Bank, in emailed remarks to reporters. "This doesn’t mean that the US companies did well during the pandemic, it only means that they did better than analyst expectations."
Later Wednesday, executives from Facebook (FB) - Get Facebook, Inc. Class A Report, Apple (AAPL) - Get Apple Inc. (AAPL) Report, Amazon (AMZN) - Get Amazon.com, Inc. Report and Google (GOOGL) - Get Alphabet Inc. Class A Report will testify in front of Congress, which will grill the executives on potentially anti-competitive practices. These hearings in the past have lead to some volatility in the shares of these companies, although these stocks have powered through the regulatory headwind, as the market now appreciates that regulation may not come all at once or even very soon.