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Stocks gain as earnings provide some optimism; 10-yr yield climbs

NEW YORK : Stock indexes around the world jumped on Tuesday as U.S. technology shares extended recent gains and earnings reports were upbeat, while the 10-year U.S. Treasury yield rose to its highest in more than four months.

The U.S. dollar was lower on the day as other currencies, including sterling, were supported by investor expectations that interest rates could be increased sooner than some had forecast.

On Wall Street, the technology sector boosted the S&P 500 the most, while recent stronger-than-expected results have bumped up the forecast for S&P 500 earnings for the third quarter.

Investors remain worried, however, about the impact that higher costs, supply disruptions and labor shortages are having on companies.

"The key for the market to going up from here will not be higher multiples, it will have to be higher earnings. That's why it's so important to pay attention to what those profit margins do going forward and what the trajectory of GDP looks like," said Eric Marshall, portfolio manager at Hodges Funds.

Among U.S. companies reporting results on Tuesday, insurer Travelers Cos Inc beat estimates for third-quarter profit and its shares rose. Johnson & Johnson raised its 2021 adjusted profit forecast and its shares jumped 2.3per cent.

The Dow Jones Industrial Average rose 198.7 points, or 0.56per cent, to 35,457.31, the S&P 500 gained 33.17 points, or 0.74per cent, to 4,519.63 and the Nasdaq Composite added 107.28 points, or 0.71per cent, to 15,129.09.

The pan-European STOXX 600 index rose 0.33per cent and MSCI's gauge of stocks across the globe < .MIWD00000PUS> gained 0.73per cent.

The MSCI index reached its highest in about a month.

MSCI World Index https://fingfx.thomsonreuters.com/gfx/mkt/zgvomrjmavd/worldper cent20stocksper cent20octper cent2019.PNG

The dollar index against a basket of other currencies was last down 0.22per cent on the day at 93.73, after earlier dropping to 93.50, the lowest since Sept. 28.

The euro gained 0.25per cent to US$1.1640. Currencies, including sterling and the New Zealand dollar, are benefiting from rising interest rate increase expectations.

Bitcoin last rose 3.49per cent to US$64,201.08.

In the U.S. Treasury market, the yield curve widened, reversing the recent trend.

In afternoon U.S. trading, U.S. 10-year yields were last up nearly six basis points at 1.6407per cent. The yield hit a 4-1/2-month peak of 1.6440per cent.

The U.S. 5-year yield, which has been on a tear the last two weeks, was last down at 1.1586per cent.

Oil prices climbed and were near multi-year highs as an energy supply crunch continued across the globe. Brent crude rose 75 cents to settle at US$85.08 a barrel. U.S. West Texas Intermediate (WTI) futures rose 52 cents to settle at US$82.96.

In other commodities, U.S. gold futures gained 0.15per cent to US$1,769.70 an ounce.

(Additional reporting by Tommy Wilkes in London, Shreyashi Sanyal and Devik Jain in Bengaluru, Karen Brettell, Stephanie Kelly and Sinead Carew in New York, and Saikat Chatterjee; Editing by Jason Neely, John Stonestreet, Steve Orlofsky and Cynthia Osterman)

Source: Reuters

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