Dow rises as corporate earnings exceed expectations

The Dow Jones Industrial Average closed higher overnight as traders digested better-than-expected corporate earnings.

The Dow added 366.58 points, or 1.06 per cent, to close at 34,951.93. The Nasdaq Composite climbed 0.76 per cent to finish the session at 14,353.64, while the S&P 500 gained 0.71 per cent to end at 4,554.98.

The Dow notched its seventh straight day of gains and its longest winning streak since March 2021. All three major averages had their highest closes since April 2022.

Bank of America reported better-than-expected earnings for the second quarter, thanks to higher interest rates. Bank of New York Mellon's earnings also exceeded expectations. Shares of both banks gained more than 4 per cent.

Morgan Stanley stock added 6.4 per cent after a beat on both revenue and adjusted earnings per share, driven by record revenue in its wealth management segment.

PNC Financial advanced 2.5 per cent on the back of mixed second-quarter numbers.

In mining-related news, gold mining behemoth, Newmont, has received clearance from Canada's regulator for its acquisition of ASX-listed, Newcrest Mining, moving closer to completing the transaction in Q4/2023 while awaiting approvals in other jurisdictions.

Overall, the earnings season is off to a strong start. Of the S&P 500 that have reported, 84 per cent exceeded profit estimates, according to FactSet.

Meanwhile, investors are seemingly shaking off soft data from the Commerce Department out Tuesday. Advance retail sales ticked up 0.2 per cent month-over-month in June, while economists polled by Dow Jones forecasted a 0.5 per cent increase.

Moving on, the World Meteorological Organization of the United Nations issued a warning, stating that the recent surge of global heatwaves, with temperatures exceeding 50°C in the US and China, is now considered the "new normal" attributed to climate change caused by human activities. These heatwaves are anticipated to persist in Europe throughout August.
And the recent decline in the US dollar, reaching a 15-month low and experiencing a ~2 per cent drop last week, is viewed positively for earnings due to increased peak Federal Reserve expectations and the breach of the significant 100 level.

When assessing sectors, Tech was the best performer, whilst Real Estate was the biggest laggard.

Futures

The SPI futures are pointing to a 0.5 per cent gain.

Currency

One Australian dollar at 7:20 AM was buying 68.12 US cents.

Commodities

Gold gained 1.32 per cent. Silver added 1.03 per cent. Copper dropped 0.29 per cent. Oil gained 2.12 per cent.

Figures around the globe

European markets closed higher. London’s FTSE added 0.64 per cent, Frankfurt rose 0.35 per cent, and Paris closed 0.38 per cent higher.

Turning to Asian markets, Tokyo’s Nikkei added 0.32 per cent, Hong Kong’s Hang Seng lost 2.05 per cent while China’s Shanghai Composite closed 0.37 per cent lower.

The Australian sharemarket closed 0.20 per cent lower at 7284.

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

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