Wall St Gains Over 1% on Exxon Profit Record; Encouraging Wage Inflation Data
The major U.S. stock indexes closed higher on Tuesday after reversing earlier losses in the futures market as they closed out a solid month of gains.
The move was fueled by a dip in U.S. Treasury yields as investors assessed fresh economic data and earnings reports ahead of a slew of central bank policy announcements starting with the U.S. Federal Reserve on Wednesday and ending with the Bank of England and the European Central Bank on Thursday.
On Tuesday, the blue chip Dow Jones Industrial Average settled at 34086.04, up 368.95, or +1.09%. The benchmark S&P 500 Index finished at 4076.60, up 58.83 or +1.46% and the tech-weighted NASDAQ Composite closed at 11584.55, up 190.74 or +1.67%.
Slower Fourth Quarter Labor Cost Growth Fuels Strong Recovery Rally
Stocks recovered from early session weakness on Tuesday after a report showed U.S. labor costs increased at their slowest pace in a year in the fourth quarter as wage growth slowed, giving the Federal Reserve a boost in its fight against inflation.
The Employment Cost Index, the broadest measure of labor costs, rose 1.0% last quarter, the Labor Department said. That was the smallest advance since the fourth quarter of 2021 and followed a 1.2% gain in the July-September period. Economists polled by Reuters had forecast the ECI would rise 1.1%.
Treasury Yields Decline as Fed Meeting Kicks Off
U.S. Treasury yields fell on Tuesday as the Federal Reserve’s latest meeting kicked off and investors fretted over its policy outcome.
The Fed is widely expected to announce a 25 basis point hike when its meeting concludes on Wednesday, further slowing the pace of rate increases it has implemented in its battle with inflation. Investors will also be looking to the central bank for guidance on rate policy and its expectations for broader economic developments.
GM Smashes Expectations and Guides Toward a Strong 2023, Despite Margin Squeeze
General Motors handily beat Wall Street’s top- and bottom-line expectations for the fourth quarter, while forecasting another solid year of results in 2023.
The strong report suggests GM is hanging onto record, or near-record, results even as the U.S. automotive industry begins to normalize after several years of record-low inventories and resilient consumer demand.
Shares of GM rallied as much as 9.5% during trading Tuesday before closing at $39.32 a share, up by 8.4%. It was the stock’s best daily performance since Oct. 4.
Exxon Smashes Western Oil Majors’ Profits with $56 Billion in 2022
Exxon Mobil Corp posted a $56 billion net profit for 2022, the company said on Tuesday, taking home about $6.3 million per hour last year, and setting not only a company record but a historic high for the Western oil industry.
Exxon’s results far exceeded the then-record $45.2 billion net profit it reported in 2008, when oil hit $142 per barrel, 30% above last year’s average price. Deep cost cuts during the pandemic helped supercharge last year’s earnings.
“Overall earnings and cash flow were up pretty significantly year on year,” Exxon Chief Financial Officer Kathryn Mikells told Reuters. “So that came really from a combination of strong markets, strong throughput, strong production, and really good cost control.”