U.S. stocks rose on Tuesday after a fresh batch of corporate earnings largely beat estimates even as investors weighed risks to economic growth from the Federal Reserve raising interest rates to combat inflation.

The S&P 500 and the Nasdaq 100 rose for a third straight session. The Coca-Cola Co. and General Motors Co. rose after topping analysts’ earnings estimates. This week’s big-tech earnings will show investors whether companies can deliver profits with inflation crimping margins. Major companies including Alphabet Inc., Microsoft Corp. and Visa Inc. are set to report earnings after the markets close.  

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Treasuries rallied, with the 10-year yield falling to around 4.09 per cent. The dollar dropped after data on Tuesday showed that home-price growth in the U.S. slowed as high borrowing costs sapped demand.

Investors still expect the Fed to raise rates by three-quarters of a percentage point during its meeting next week. But recent economic data is already showing that Fed tightening has started to weigh on the US economy, which has led investors to speculate that the central bank may be approaching the end of its aggressive tightening campaign. This renewed expectation of less hawkishness from the Fed, as well as a better-than-expected earnings season so far, have pushed stocks higher. 

“The big thing is what we’re seeing from earnings, and as we get more and more, the market is coming around to this sense that the outlooks aren’t nearly as bad as some had feared,” Shawn Cruz, head trading strategist at TD Ameritrade, said in an interview. “The market was actually bracing itself for more pessimistic tones from companies as we got through earnings and it’s not coming out that way right now. It’s mixed too, but even being mixed is ahead of expectations.”

Analysts are also expecting a jumbo hike of 75 basis points from the ECB on Thursday, even as many economists now reckon a recession has begun in the euro region. German business confidence improved in October, data showed Tuesday, though remained at depressed levels as Europe’s largest economy heads into a challenging winter.

Elsewhere in markets, the British pound gained as Rishi Sunak formally took over as U.K. prime minister on Tuesday, vowing to “fix” the mistakes made by his predecessor, Liz Truss. 

Key events this week:

• Earnings due this week include: Apple, Microsoft, Exxon Mobil, Ford Motor, Credit Suisse, Airbus, Alphabet, Amazon, Bank of China, Boeing, Caterpillar, Cnooc, Intel, McDonald’s, Mercedes-Benz, Merck, Samsung Electronics, Shell, Vale, Visa, Volkswagen
• Bank of Canada rate decision, Wednesday
• ECB rate decision, Thursday
• U.S. GDP, durable goods orders, initial jobless claims, Thursday
• Bank of Japan policy decision, Friday
• U.S. personal income, personal spending, pending home sales, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 rose 1.7 per cent as of 4 p.m. New York time
• The Nasdaq 100 rose 2.1 per cent
• The Dow Jones Industrial Average rose 1.1 per cent
• The MSCI World index rose 0.8 per cent

Currencies

• The Bloomberg Dollar Spot Index fell 0.8 per cent
• The euro rose 0.9 per cent to US$0.9967
• The British pound rose 1.7 per cent to US$1.1471
• The Japanese yen rose 0.7 per cent to 147.93 per dollar

Cryptocurrencies

• Bitcoin rose 4.6 per cent to US$20,274.81
• Ether rose 11 per cent to US$1,493.73

Bonds

• The yield on 10-year Treasuries declined 16 basis points to 4.08 per cent
• Germany’s 10-year yield declined 16 basis points to 2.17 per cent
• Britain’s 10-year yield declined 11 basis points to 3.64 per cent

Commodities

• West Texas Intermediate crude rose 0.5 per cent to US$85.02 a barrel
• Gold futures rose 0.2 per cent to US$1,657.90 an ounce