Texas Instruments was one of the biggest winners, soaring about 4.2% in after-market Wednesday. The increase provided bullish momentum in the big U.S. indices for the rest of the day. The Dow Jones Industrial Average enjoyed a historic day, climbing more than 400 points and ballooning by more than 1,100 points at its height. The S&P 500 added about 1.7% in regular trading, but the Nasdaq Composite took off to the upside, jumping an astounding 2.5%. Not surprisingly, the Nasdaq has exploded higher by 2.6% this week. Now, during the same time period, the S&P 500 has risen almost 1.8%.
On Thursday alone, a handful of the nation’s biggest publicly-held firms including Alphabet, Intel and PepsiCo — all are scheduled to report quarterly earnings. Investors continue to closely watch these results to get a sense of the economic environment and company performances during the ongoing fourth quarter. Alphabet’s performance, in particular, will be closely scrutinized as it may provide insights into the tech sector’s overall health amidst ongoing market fluctuations.
In an interesting parallel, IBM had just announced first quarter earnings and revenue that were both significantly ahead of Wall Street expectations. The company didn’t just blow out the quarter, it also held on to its full-year guidance, a nod to management’s confidence in strong future performance. This news could further improve investor confidence as the positive themes continue to play out within North America’s capital markets, still digesting earnings from across the spectrum.
The context for all these changes is the continuing trade war between the U.S. and China. Chinese imports are currently hit with a massive 145% tariff, raising eyebrows all across the world on the state of international trade relations. Earlier this week, former President Donald Trump is hoping to get more non-confrontational in trade talks with Beijing. Investors are cautiously optimistic that this transition will calm rising geopolitical tensions and provide the stabilization markets have been craving.
For his part, Trump never shied away from lambasting Federal Reserve Chairman Jerome Powell. He quickly and loudly denounced Powell a “major loser” within his speech. Together, these comments are a continuation of Trump’s unprecedented attack on monetary policy and the pernicious corrosive effects it has for sustainable economic growth.
While investors have one eye focused on near-term earnings releases and a volatile geopolitical backdrop, the sharp advance suggests traders are feeling optimistic. The surge in major indices suggests a potential shift in sentiment as companies report their financial results, which could shape market direction in the coming weeks.