Key Points:
- Stocks Extend Rebound on Rising Earnings Optimism
- Netflix gains in late trading after surprise subscriber growth
- BofA strategists see bottom for equities in first half of 2023
Stocks continued their rebound from nearly oversold levels as traders took solace from a solid start to the corporate-earnings season even as central banks remain on hawkish footing.
After almost giving up all of its gains, the S&P 500 notched back-to-back gains to start the week. Futures extended the advance in late trading after Neflix Inc. delivered a surge in subscribers. Its shares jumped more than 13% as of 4:40 p.m. in New York. The biggest ETF that tracks the Nasdaq 100 advanced more than 1%. United Airlines Holdings Inc. climbed 7% after reporting its results.
During the cash session, the S&P 500 rose 1.1% and is now up 3.8% in two days. Goldman Sachs Group climbed on solid results. Apple Inc. rebounded after briefly turning negative on a report it was cutting production of its iPhone 14 Plus.
“Earnings season offers investors the opportunity to focus more on the actual earnings power of corporate America, and less on the machinations of the backward-looking economic data stream,” said Art Hogan, chief market strategist at B. Riley. “A better-than-feared earnings season may well be the catalyst the market needs to see a break in the steady grind lower.”
Upbeat company results, cheaper valuations and UK policy reversals have helped buoy risk sentiment. The sentiment on stocks and global growth among fund managers surveyed by Bank of America Corp. shows full capitulation, opening the way for equities to bottom in the first half of 2023.
Still, with headwinds from inflation, risks to the economy and hawkish central banks continuing to confront investors, there’s debate over how durable the gains will prove.