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NEW YORK — Stocks soared in afternoon trading on Wall Street as investors reviewed the latest corporate earnings round and Delta Air Lines’ upbeat report that bodes well for the broader travel industry.
The S&P 500 was up 0.7% as of 1:56 p.m. Eastern. The Dow Jones Industrial Average rose 231 points, or 0.7%, to 34,450 and the Nasdaq rose 1.5%.
Travel-related companies were among the biggest winners after Delta reported strong revenue and solid bookings in the first quarter. The update is encouraging for the broader travel industry as airlines, cruise ships and hotels prepare for the summer holiday season.
Delta was up 5.6% and rival American Airlines was up 9.5%. Southwest and United Airlines were up more than 5%. Cruise line operators Carnival and Royal Caribbean also made solid gains with Expedia Group.
Technology stocks also did most of the heavy lifting for the broader market. For many of the larger tech companies, expensive assessments put more weight on driving the broader market up or down.
Banks slumped after a disappointing earnings report that fell 3.2% after JPMorgan announced a sharp drop in profits as it wrote off nearly $1.5 billion in assets due to high inflation and the Russia-Ukraine War.
Bond yields fell. The 10-year Treasury rate fell from 2.72% to 2.68%.
Gains in equities follow three consecutive losses for the benchmark S&P 500 index, driven by persistent concerns about inflation and the hard drug the Federal Reserve plans to use against it, high interest rates.
The Labor Department reported that rising energy costs pushed wholesale prices to a record 11.2% increase from a year ago last month – another sign that inflationary pressures are rampant in the US economy. This report comes a day after the department reported that consumer prices have remained at their highest levels for generations.
“In the near term, there is a lot of focus on what the inflection point looks like and there is now confidence that we are seeing a peak,” said Yung-Yu Ma, chief investment strategist at BMO Wealth Management.
“Inflation, while apparently peaking, will remain stable for a while as cost pressures seep their way through the markets over the next few quarters,” he said.
Persistently rising inflation prompted the Federal Reserve to tighten monetary policy to lessen the impact of inflation on businesses and consumers. The central bank has already announced a quarter-point rate hike and is expected to continue raising rates throughout the year.
In the minutes of its last meeting, the Fed announced that it was ready to raise short-term interest rates by half a percentage point, doubling the normal amount, something it hasn’t done since 2000.
“The Fed wants to move to a neutral or near-neutral position as quickly as possible,” Ma said. “Fed is still in a bit of shell shock reaction mode.”
Persistent concerns about inflation and rising interest rates were exacerbated by the Russian invasion of Ukraine. The conflict has caused fluctuations in energy prices, as oil supply is already limited due to increased demand. U.S. crude oil prices rose 3.3% and rose roughly 40% for the year. This has increased gasoline prices and increased the blow that inflation has done to people’s wallets.
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