US MARKETS IN DETAIL

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Today’s Major Results: GlenmarkLife, IndianBk, ISEC, RIIL, TATAELXSI, etc.

Provisional Cash Rs. In Crs. (19th Apr)

FIIs: -5,872 (9,639 - 15,511)

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IPL T20 update:

Yesterday: RCB (181/6) bt LSG (163/8) (T20 31 of 70)

Today: DC vs PBKS (T20 32 of 70)

Sensex: 56,463 (-704) (-1.23%)

Nifty: 16,959 (-215) (-1.25%)

Dow: 34,911: +500: +1.45%

S&P: 4,462: +71: +1.61%

Nas: 13,620: +287: +2.15%

Brazil: 115,056 (-631) (-0.55%)

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Cac: 6,535 (-55) (-0.83%)

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Gold: $1,959 (-27) (-1.38%)

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Copper: $474 (-8) (-1.70%)

Zinc: 4,412 (-50) (-1.11%): shut

Alluminum: 3,286: +50: +1.53%: shut

Eur-$: 1.0789

GBP-$: 1.2999

Jpy-$: 129.20

Re: 76.5038: +0.31%

USD = RUB: 80.6438: +0.25%

US10yr: 2.94%

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$ Index: 100.799: +0.30%

US Vix: 21.37 (-3.61%)

India Vix: 19.78: +2.28%

BalticDry: 2,137: +69: +3.34%

ADR/GDR

Cogni: +1.34%

Infy (-0.68%)

Wit: +0.72%

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TataMo (-1.26%)

TatSt (%)

Axis: +0.58%

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RIGD: +2.39%

INDA (-1.12%) (IShares MSCI INDIA ETF)

INDY (-0.82%) (IShares MSCI INDIA 50 ETF)

EPI (-0.90%) (Wisdom Tree India Earning)

PIN (-1.05%) (Invesco India Etf)

Major U.S. stock benchmarks closed sharply higher, snapping two straight days of losses, with gains led by the technology-heavy Nasdaq Composite, as investors weighed whether a raft of corporate earnings results will help markets break out of a recent rut. The stock-market gains also came amid a drop in energy prices.

U.S. stocks gained in a broad-based rally as investors weighed the resilience of the economy against prospects for aggressive policy action to curb inflation. Treasury yields climbed across the curve, while oil fell on demand concerns.

The S&P 500 bounced back from the lowest close in more than a month, with all 11 main industry groups advancing except energy. The tech-heavy Nasdaq 100 jumped more than 2%, a threshold reached by the small-cap Russell 2000 index. Yields on short-end Treasuries -- the most sensitive to changes in interest rates -- led the move higher.

On a quiet Monday with several international markets shut, the Dow fell 40 points, or 0.1%, while the S&P 500 edged down 1 point and the Nasdaq Composite lost 0.1%. The S&P 500’s decline marked its seventh fall in the last nine sessions though Monday.

What drove markets?

Major U.S. stock benchmarks posted sharp gains Tuesday, rising amid a busy week for first-quarter earnings reports and a drop in energy prices.

We’ve got oil and natural gas down quite a bit today, which may be behind some of the “enthusiasm” in the market. West Texas Intermediate crude for May delivery dropped 5.2% Tuesday to settle at $102.56 a barrel.

Lower energy prices help “consumer discretionary spending, when consumers pay less at the gas pump they have more to spend in other areas of the economy. Energy was the sole sector showing losses in the S&P 500 index Tuesday, down around 1%.

This week is one of the busiest weeks in the U.S. quarterly earnings reporting season, after a raft of banks posted somewhat disappointing first-quarter results last week.

“I would continue to forecast solid profit growth,” despite challenges companies have been facing such as high inflation, said Greg Marcus, managing director at UBS Private Wealth Management, in a phone interview Tuesday.

Johnson & Johnson headlined the companies reporting ahead of Tuesday’s open, and International Business Machines Corp. and Netflix Inc. report after the close. Netflix shares have been hammered this year, skidding about 42%, on investor concern about the company’s subscription numbers.

Netflix Inc. tumbled in after-hours trading after the streaming service lost 200,000 customers in the first quarter and projected losing another 2 million customers in the current second quarter. Shares of streaming-video companies such as Walt Disney Co. and Roku Inc. also retreated.

International Business Machines Corp. gained in the post-market after reporting sales that topped estimates on strong demand for its hybrid-cloud offerings.

Refinitiv’s S&P 500 earnings scorecard Tuesday estimates blended earnings growth of 6.4% during the first quarter on a year-over-year basis. Excluding the energy sector, the growth rate for the index is 0.8%, the scorecard shows.

Meanwhile, the International Monetary Fund on Tuesday said the war in Ukraine will lead to a significant slowdown in global economic growth this year, though the institution isn’t forecasting recession or stagflation for the U.S. or Europe.

The IMF said global growth would slow to a 3.6% rate this year, down from 6.1% in 2021 and 0.8 percentage points lower than in the last forecast in January. Still 3.5% growth is in line with long-run trends. The U.S. economy is expected to grow at a 3.7% rate this year, down from the prior estimate of 4%.

U.S. economic data released Tuesday showed housing starts in March rose 0.3% from February despite high inflation and rising mortgage rates. Housing starts were up nearly 4% compared with March 2021.

So far the economic data has been holding up fairly well, so there is some underlying strength even though recession worries are growing and voices about a growth slowdown are getting louder

“We have a massive shortage of housing in this country,” said Marcus, who is based in Washington, D.C.

St. Louis Federal Reserve Bank President James Bullard on Monday repeated his case for increasing the rates to 3.5% by the end of the year to slow a 40-year-high inflation. He also said he did not rule out a 75 basis points rate hike.

Stocks appeared to brush aside the remarks, and the main indexes rallied further in late afternoon trading after both Chicago Federal Reserve Bank President Charles Evans and Atlanta Federal Reserve Bank President Raphael Bostic offered more dovish comments.

Chicago Fed President Charles Evans said Tuesday that interest rates will probably rise above the neutral level. Investors, already betting on an almost half-point Federal Reserve rate increase next month, have been reassessing expectations after St. Louis Fed President James Bullard said hikes of as much as 75 basis points shouldn’t be ruled out. The last increase of such magnitude was in 1994.

As for rising interest rates, Charles Evans, the president of the Federal Reserve Bank of Chicago, said Tuesday during a talk at the Economic Club of New York that the Fed could raise its benchmark rate by increments of 50 basis points at least a few times this years. Evans, who is not a voting member of the bank’s interest-rate setting panel this year, indicated that the fed funds rate could eventually top 3%.

“Generally, most markets are focused on how fast the Fed and other central banks are going to go, and ultimately what rates are going to take a breather at,” Brian Nick, chief investment strategist at Nuveen, said by phone. “Underlying all of this, though, is the fact that economic data still is quite solid. I would say it’s strong in the United States at this point.”

Bond yields continued their recent moves higher though. The 30-year yield exceeded 3% for the first time since April 2019, while the yield on the 10-year Treasury Inflation-Protected Securities (TIPS) turned positive for the first time since March 2020, the start of the coronavirus pandemic.

We typically assume higher yields should be beneficial for banks, but that correlation has broken down a bit and it's been the sectors most negatively-correlated to rising rates - defensive sectors - which have actually rallied.

“Both sentiment and positioning are now too bearish, in our view. While we slightly reduced our record equity allocation ... we remain constructive on equities and think that a near-term rally is likely, particularly in small-cap and high-beta market segments,” JPMorgan’s Marko Kolanovic said in a note to clients.

Trading volume on U.S. exchanges was 10.53 billion shares, compared with the 11.67 billion average for the full session over the last 20 trading days.

So far, with just 48 companies in the S&P 500 reporting results as of the close of trading Tuesday, 79% posted positive surprises, data compiled by Bloomberg show. On Monday, Bank of America Corp. joined a string of earnings beats by big lenders.

“The U.S. first-quarter earnings season, which continues this week, looks set to be positive, and we forecast earnings per share growth of 10% for 2022 overall and 7% for 2023,” said Mark Haefele, chief investment officer at UBS Global Wealth Management. “Against this backdrop, investors should also seek long-term value in stocks. Periods of heightened market volatility and uncertainty can often lead to attractive longer-term entry points in areas of structural growth.”

Which companies were in focus?

• Shares of Johnson & Johnson rose slightly more than 3% after the pharmaceutical and consumer products company topped first-quarter profit expectations but missed on revenue, and cut its full-year outlook.

• American Campus Communities Inc. on Tuesday confirmed a report by The Wall Street Journal that it agreed to be acquired by Blackstone Inc. in a deal that values the student housing company at about $12.8 billion including debt. American Campus shares jumped 12.5%, while Blackstone shares gained 4.9%.

• Shares of Hasbro Inc. climbed 5.2% after the toymaker missed first-quarter profit estimates. Its revenue was in line with estimates.

• Twitter Inc. was expected to turn down. Tesla Inc. Chief Executive Elon Musk’s offer for the social-networking company, while The Wall Street Journal reported late Monday that private-equity powerhouse Apollo Global Management Inc. was considering whether to join in a bid. CNBC later reported that Apollo’s interest was focused on lending money to potential purchasers, not on a private-equity-style buyout. Twitter shares fell 4.7%.

• Travelers Companies dropped 4.9% and Lockheed Martin shares lost 1.6% after posting mixed results.

US MARKETS IN DETAIL

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