Stocks rose on Tuesday as a rebound in the Turkish lira from an all-time low lifted investor sentiment.
The Dow Jones Industrial Average rose 63 points, while the S&P 500 gained 0.3 percent. Both indexes were also on track to snap four-day losing streaks. The Nasdaq Composite gained 0.4 percent.
Energy shares were the best performers on Wall Street, as the sector rose nearly 1 percent on the back of a 1.6 percent gain in U.S. crude. Tech shares also contributed to the gains as Apple and Amazon both rose.
The lira rose more than 4 percent to trade at 6.56 after falling to a record-low 7.24 per dollar on Monday. The currency has been under pressure recently as market watchers became jittery over Turkish President Recep Erdogan’s control of the economy and Donald Trump saying last week that he supported doubling metal tariffs on the Middle Eastern country.
Still, Jeremy Klein of FBN Securities thinks the recent decline in U.S. stocks related to Turkey’s turmoil will be short lived. “Turkey is not a member of the European Union or the euro zone, so it has less hooks into the European banks, which means less trouble for us,” Klein, the firm’s chief market strategist, said. “I think it will be well contained.”
Tensions between the two countries intensified after a Turkish delegation left Washington last week with no apparent progress on the detention of U.S. pastor Andrew Brunson, who is charged with supporting a group blamed for an attempted coup in 2016.
Photo by Michael Nagle/Bloomberg via Getty Images
Traders work on the floor of the New York Stock Exchange on Monday, Feb. 5, 2018. U.S. stocks plunged, as major averages erased gains for the year.
Turkey is also dealing with an economic tailspin as inflation has surged there recently. Last month, Turkey’s inflation rate hit 16 percent, well above the central bank’s 5 percent target. The financial troubles have sparked fear of contagion across Europe.
Emerging-market shares followed the lira higher. The iShares MSCI Emerging Markets exchange-traded fund rose about half a percent, putting it on track to snap a four-day slide. Turkish stocks jumped 7 percent to lead the gains while Brazil, Mexico and South Korea all climbed at least 1 percent.
Home Depot reported second-quarter earnings and revenue easily topped Wall Street estimates. The company also raised its full-year earnings outlook. The stock rose in the premarket but fell about 1 percent after the open.
The Dow component is the latest company to report better-than-expected quarterly earnings in what has been a very strong reporting season. Through Tuesday morning, 76.84 percent of S&P 500 companies that have topped analysts’ earnings estimates, according to FactSet. Corporate earnings have grown more than 24 percent for the second quarter on a year-over-year basis.
“Considering the [second-quarter] 2018 sales and earnings beat and growth rates, … there are not many negatives you can legitimately say about overall earnings at this point,” said Nick Raich, CEO of The Earnings Scout.