Nasdaq Rises On Positive Earnings Signals As Inflation Concerns Loom

The tech-heavy Nasdaq climbed over 1% on Wednesday as investors digest the latest earnings as positive signals of the economy, albeit rising concerns on inflation and a tightening Fed.

The S&P 500 edged up 0.39% while the Dow Jones Industrial Average slipped 0.12%.

Netflix Inc's shares jumped 6% after the company predicted it would return to customer growth during the third quarter, while posting a smaller-than-expected 1 million drop in subscribers in the second quarter.

Other high-growth stocks extended gains following the forecast from the streaming service provider. Shares of Apple Inc, Amazon.com Inc, Microsoft Corp and Meta Platforms Inc added between 1% and 3.6%.

The S&P 500 technology sector index rose 1.3%.

"Inflation remains a very strong consideration on investors' minds... what we are seeing today are some positive earnings announcements allowing investors to hang their hats on some positive news that should bode better for the remainder of Q3, and 2022," said Greg Bassuk, chief executive at AXS Investments in Port Chester, New York.

"For Tesla, and Netflix and some of these bellwether companies ... investors are looking for messaging on the outlook that these companies have on the balance of 2022."

Electric vehicle maker Tesla Inc added 0.6% ahead of its earnings report after market close.

Analysts expect aggregate year-on-year S&P 500 profit to grow 5.9% in this reporting season, down from the 6.8% estimate at the start of the quarter, according to Refinitiv data.

Runaway inflation initially led markets to price in a full 100-basis-point hike in interest rates at the Fed's upcoming meeting next week, until some policymakers signaled a 75-basis-point increase.

At 1:45 p.m. ET, the Dow Jones Industrial Average fell 37.45 points, or 0.12%, to 31,789.6, the S&P 500 gained 15.19 points, or 0.39%, to 3,951.88 and the Nasdaq Composite added 145.44 points, or 1.24%, to 11,858.59.

Trading remained volatile in thin volumes, with the CBOE Volatility index last down 24.05 points to its lowest in over a month.

"Low volumes accentuate market moves historically and even though we've wiped off $10 or $15 trillion from global equities this year, there's still a lot of excess liquidity. So low volume on excess liquidity can still accentuate moves," John Lynch, chief investment officer for Comerica Wealth Management, said.

Health insurer Elevance Health Inc plunged 9% as the largest S&P percentage loser, as the company's medical costs failed to decrease in line with rival UnitedHealth Group Inc.

Baker Hughes Co tumbled 7.8% as the oilfield services provider reported a bigger second-quarter loss, while its adjusted profit also missed estimates.

Advancing issues outnumbered declining ones on the NYSE by a 1.55-to-1 ratio; on Nasdaq, a 2.09-to-1 ratio favored advancers.

The S&P 500 posted one new 52-week high and 29 new lows; the Nasdaq Composite recorded 24 new highs and 24 new lows.