Tech Stocks Lead Major Indexes Higher
February 03 2021 - 10:30AM
Dow Jones News
By Will Horner
U.S. stocks showed further signs of stability Wednesday as
investors cheered corporate earnings and the prospect of more
fiscal stimulus.
The S&P 500 ticked up 0.1%. The Dow Jones Industrial Average
slipped around 51 points. The tech-heavy Nasdaq Composite Index
rose 0.4% after Alphabet reported strong sales growth late
Tuesday.
Stock markets have rallied this week, shaking off concerns about
stretched valuations, a sharp run-up in prices for a handful of
stocks and silver, a weak economic backdrop and the threat of new
coronavirus variants. Investors have focused instead on
better-than-expected corporate results, a decline in new
coronavirus cases and bets that President Biden will deliver more
fiscal spending in coming weeks.
"The last two days have seen the return of the feeling that we
still have monetary stimulus in the background and the prospect of
an additional stimulus package to come," said Seema Shah, chief
strategist at Principal Global Advisors. "The path ahead isn't a
smooth one, but we think it is an upward one."
Shares in Alphabet climbed 6.6% after the parent of Google said
late Tuesday that it had booked record revenue in the fourth
quarter.
Amazon.com edged down 0.9%. The giant online retailer late
Tuesday posted record quarterly sales, marking the first time its
revenue crossed more than $100 billion in a three-month period. It
also said Jeff Bezos would be stepping down as CEO.
Spotify Technology slipped around 8% after it offered a cautious
view of the year ahead early Wednesday.
More companies including Qualcomm, PayPal Holdings and Costco
Wholesale are due to report earnings after markets close.
"Earnings have been definitely quite a bit stronger than anyone
expected, and they are led by the areas that we have so far seen
strength in: the tech sector, the stay-at-home sector," said Matt
Forester, chief investment officer of BNY Mellon's Lockwood
Advisors. "We still have a lot to see, though, particularly in the
sectors that have been so heavily impacted by Covid."
Investors are also tracking talks between lawmakers over another
round of coronavirus relief measures. President Biden's
administration has called for a package totaling $1.9 trillion,
though a counter offer from Republicans this week was less than
half of that. The Democrats are expected to make a decision in
coming days on whether to start trying to quickly push into law a
larger stimulus bill on their own.
"The bigger focus is on the timing," said Mrs. Shah. "There is a
general view that the stimulus will be sizable, the important
question is, does it come soon enough because the U.S. economy
needs it now."
Some stocks that have soared in popularity among traders on
online forums were choppy in early Wednesday trading, after
suffering sharp reversals in the previous session. AMC
Entertainment Holdings rose 8.6%, having fallen 41% on Tuesday.
GameStop climbed 13%, after slumping 60% Tuesday.
Treasury Secretary Janet Yellen has called a meeting with top
financial regulators to discuss recent volatility in financial
markets related to GameStop, a Treasury spokeswoman confirmed
Tuesday night.
Fresh economic data will offer clues on the health of the
services sector. The Institute for Supply Management's services
index for January is due at 10 a.m. ET, and is expected to show a
continued expansion in activity for January.
In commodity markets, Brent crude, the international benchmark
for oil, rose 1.2% to $58.14 a barrel. The gauge is near its
highest level since the pandemic rattled global financial markets
last spring.
Silver prices gained 2% to $26.9 a troy ounce.
In the bond market, the yield on the 10-year Treasury note held
gains after the Treasury Department said it intends to maintain the
size of its nominal note and bond sales this quarter. It was
recently up to 1.117% from 1.105% Tuesday.
Overseas, the pan-continental Stoxx Europe 600 rose 0.4%.
Italy's FTSE MIB stocks index outperformed other regional
benchmarks after former European Central Bank President Mario
Draghi was asked to form a new government. The nation's 10-year
bond yield ticked down to 0.581%, from 0.651% on Tuesday.
In Asia, Japan's Nikkei 225 rose 1%. Hong Kong's Hang Seng added
0.2% while on the Chinese mainland, the Shanghai Composite Index
fell 0.5%.
Write to Will Horner at William.Horner@wsj.com
(END) Dow Jones Newswires
February 03, 2021 10:15 ET (15:15 GMT)
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