Stocks claw back some lost ground; dollar rises
U.S. stocks pared gains as a rally in tech shares lost steam and investors parsed the latest corporate results. The dollar caught bids, while the euro fell to session lows ahead of a confidence vote in Italy.
The S&P 500 recovered some lost ground, though still well off the day’s highs.
The tech-heavy Nasdaq 100 also pared gains.
Netflix Inc. jumped after it reported better-than-feared earnings, underpinning rallies in streaming peers Walt Disney Co. and Paramount Global.
Tesla Inc. rose ahead of its earnings set for release later Wednesday.
Stocks are up for a third day in four amid optimism over the earnings season and growing speculation markets may have bottomed out.
While that debate continues, with Sanford C. Bernstein strategists saying markets have yet to see full capitulation, rates markets have discarded bets the Federal Reserve will hike rates by a full percentage point next week, bolstering optimism the central bank will take a more measured approach to policy tightening.
“The fact that companies are showing a certain resilience to the current environment is reassuring market operators who have now started betting on a less aggressive monetary tightening than initially expected,” said Pierre Veyret, a technical analyst at ActivTrades.
“Even if we’re not out of the woods yet, more and more traders now tend to believe the worst is behind for equity markets this year.”
Treasurys were mixed, with the short-end, the most sensitive to Fed policy changes, bid higher. The dollar gained against most of its G-10 peers.
Risk sentiment took a hit earlier on news the European Union is preparing for a scenario where Russia halts gas exports to retaliate against sanctions over its invasion of Ukraine.
Russian President Vladimir Putin signaled Europe will start getting gas, but warned that unless a spat over sanctioned parts is resolved, flows will be tightly curbed.
West Texas Intermediate crude oil pared losses, trading around $104 a barrel.
Bitcoin gained for a third straight day, rising above $24,000 for the first time in more than a month.