U.S. stocks open higher after back-to-back losses as investors weigh earnings reports

What’s driving the market

Stocks wavered Tuesday as investors reacted to rising U.S.-China tensions over House Speaker Nancy Pelosi’s visit to Taiwan as well as remarks by Federal Reserve officials emphasizing a commitment to raising rates to wring out inflation.

Pelosi, a California Democrat, left Taiwan Wednesday after meeting with the island’s president. Pelosi’s visit angered Beijing, which sees Taiwan as part of its territory and said it would conduct live-fire military exercises in areas around the island this week.

“Two factors injected volatility into the capital markets yesterday: U.S. Speaker Pelosi’s visit to Taiwan and the Fed officials pushing back against the easing of financial conditions. Today, the market is judging China’s response to be mild, and U.S. rates have stabilized,” said Marc Chandler, chief market strategist at Bannockburn Global Forex, in a note.

Remarks by San Francisco President Mary Daly and Chicago Fed President Charles Evans, who said the Fed likely needs to raise interest rates a lot higher and probably keep them high for a while to rein in inflation, were blamed for weakness in equities during Tuesday’s session.

St. Louis Fed President James Bullard, in remarks late Tuesday, argued that the central bank can restore inflation to pre-pandemic lows without triggering a recession, partly because neither investors nor consumers expect prices to keep rising rapidly. Bullard, who sounded the alarm about rising inflation last year, well before the rest of his colleagues, has been among the most hawkish Fed policymakers.

A busy week of corporate earnings reports continues, as investors assess a string of results from tech-related companies and others.

The U.S. economic calendar features the final reading of the S&P U.S. services purchasing managers index for July at 9:45 a.m. Eastern, with the Institute for Supply Management’s closely watched July services index due at 10 a.m. June factory orders data is also set for release at 10 a.m.

Companies in focus

• Robinhood Markets Inc.
  HOOD
  said late Tuesday that it plans to cut its staff by 23%, citing the weakening economic environment and depressed trading activity. Shares of the online trading platform were up 0.8% in premarket trade.

• Shares of SoFi Technologies Inc.
  SOFI
  jumped nearly 12% after the company beat expectations with its latest results and signaled various benefits stemming from its bank charter.

• Under Armour Inc.
  UA
  shares rose 3%, after the athletic apparel and gear company matched fiscal first-quarter profit expectations and topped on revenue, but cut its full-year earnings outlook amid continued gross margin contraction.

• Yum Brands Inc.
  YUM
  on Wednesday delivered weaker-than-expected second-quarter earnings on Wednesday, and sales that fell short of forecasts, sending the stock slightly lower.

• CVS Health Corp.
  CVS
  shares rose after the drugstore chain and medical benefits company posted better-than-expected second-quarter earnings and raised guidance.

• PayPal Holdings Inc.
  PYPL
  late Tuesday announced a new chief financial officer, buyback authorization and a cost-savings program, while also confirming that activists at Elliott Management Corp. have taken a stake in the company. The company topped expectations with its second-quarter financial results while delivering a mixed update on guidance for the full year. PayPal shares were up nearly 13%.

• Airbnb Inc.
  ABNB
  said late Tuesday that it had its first profitable second quarter as a public company, and that it is so confident in its business that it is buying back $2 billion of its stock. Shares fell 7.5%.

Other assets

• The ICE U.S. Dollar Index
  DXY,
   a measure of the currency against a basket of six major rivals, edged 0.1% lower.

• The U.S. oil benchmark 
  CL
   rose $1.36, or 1.5%, to $95.76, while most-active gold futures
  GC00
  went down $9.8, or 0.6%, to $1,779.80

• Bitcoin 
  BTCUSD
   rose 2.5% to trade near $23,852.

• The Stoxx Europe 600 
  FXXP00
  gained 0.3%, while London’s FTSE 100
  UK:UKX
  rose 0.2%.

• China’s benchmark Shanghai Composite 
  CN:SHCOMP
   ended 0.7% lower, while the Hang Seng Index 
  HK:HSI
   picked up 0.4% in Hong Kong and Japan’s Nikkei 225 
  JP:NIK
  advanced 0.5%.