Wall Street ends higher, Cisco Systems jumps after forecast

Traders work on the floor of the New York Stock Exchange in New York City August 17, 2022. — Reuters pic

Friday, 19 Aug 2022 7:24 AM MYT

NEW YORK, Aug 19 — US stocks ended higher Thursday as an upbeat sales forecast from Cisco Systems helped to lift the technology sector, while data showed the economy remained relatively strong.

Investors were still assessing Wednesday’s minutes from the Federal Reserve’s July meeting, which they initially saw as supporting a less aggressive stance by the central bank.

But the minutes did not clearly hint at the pace of rate increases and showed policymakers committed to raising rates to tame inflation.

“We’re at a point where people are trying to make a judgment about whether the inevitable higher interest rates are going to choke off the upside of the market,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.

“There are really two camps — one who feels the worst is behind us and continue to buy these selloffs, and the camp that feels the worst is ahead of us and like this is some kind of bear market rally that will retreat.” Traders expect a greater chance of a 50 basis point rise in borrowing costs in September instead of a 75 basis point increase for a third time.

Meanwhile, Cisco’s stock CSCO.Ogained 5.8 per cent and was among the biggest positives on the three major indexes, after it provided an upbeat forecast for first-quarter sales late on Wednesday as a Covid-19 recovery in China eased supply chain shortages.

The Dow Jones Industrial Average .DJIrose 18.72 points, or 0.06 per cent, to 33,999.04, the S&P 500 .SPXgained 9.7 points, or 0.23 per cent, to 4,283.74 and the Nasdaq Composite .IXICadded 27.22 points, or 0.21 per cent, to 12,965.34.

Volume on US exchanges was last at 9.43 billion shares, which would be the lowest for the year so far.

Supporting the view that the Fed may need to be more hawkish, data Thursday showed solid momentum on the US economic front.

The Philadelphia Federal Reserve’s monthly manufacturing index rose to 6.2 this month from negative 12.3 in July, topping all 30 estimates in a poll of Reuters economists.

Also, a string of US central bank officials said on Thursday the Fed needs to keep raising borrowing costs to bring high inflation under control, although they debated how fast and how high to lift them.

The Fed has lifted its benchmark interest rate by 225 basis points so far this year.

Focus now could turn to the Fed’s annual Jackson Hole symposium late next week.

Other gainers in high-growth stocks included Nvidia NVDA.O, which rose 2.4 per cent.

Among the day’s decliners, shares of Kohl’s Corp KSS.Nslid 7.7 per cent after the retailer cut its full-year sales and profit forecasts. Target Corp TGT.Nfell 1.3 per cent, adding to losses from Wednesday when it reported a bigger-than-expected 90 per cent fall in quarterly earnings.

After a brutal start of the year, stocks have jumped since mid-June, partly because of upbeat earnings.

With the recent big move and second-quarter earnings nearly done, the market may be “at a little bit of an equilibirum,” Meckler said.

Advancing issues outnumbered declining ones on the NYSE by a 1.36-to-1 ratio; on Nasdaq, a 1.18-to-1 ratio favored advancers.

The S&P 500 posted 5 new 52-week highs and 29 new lows; the Nasdaq Composite recorded 62 new highs and 63 new lows. — Reuters

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