Stocks Rise as Earnings Season Ramps Up
January 19 2021 - 10:37AM
Dow Jones News
By Anna Hirtenstein
U.S. stocks climbed amid a slew of earnings reports and
testimony by Janet Yellen in which she is expected to support
higher coronavirus relief spending.
The Dow Jones Industrial Average gained 107 points, or 0.4%, in
morning trading. The S&P 500 rose 0.5%, while the
technology-heavy Nasdaq Composite advanced 0.6%.
The early gains came as U.S. markets reopened after a long
holiday weekend and followed a decline in the three major indexes
last week.
Earnings season kicked into high gear. Shares of Bank of America
were roughly flat after it reported a 22% decline in quarterly
profit. Goldman Sachs slumped 0.7% despite releasing earnings that
significantly beat expectations.
Netflix is expected to report results after markets close.
Major banks' earnings suggest they are "seeing the economy
stabilize; their worst-case scenarios haven't been met," said
Shaniel Ramjee, a multiasset fund manager at Pictet Asset
Management. "Even if the virus is still with us, banks are seeing
an uplift in the economy."
The strong markets of recent months have also boosted some
investment banks' trading revenue, which was reflected in Goldman's
earnings, Mr. Ramjee added.
Ms. Yellen is scheduled to speak at 10 a.m. ET before the Senate
Finance Committee, which will vote on her nomination for Treasury
secretary. According to a copy of her prepared remarks, she will
tell lawmakers that the U.S. risks a longer, more painful recession
unless Congress approves more aid, and to encourage them to "act
big" to shore up the recovery.
President-elect Joe Biden unveiled a plan for a $1.9 trillion
fiscal stimulus package last week, which would include direct
payments of $1,400 to most households and spending on vaccine
distribution. Passing it through Congress is one of the first major
tests for the incoming leader, who will be inaugurated
Wednesday.
Ms. Yellen will be the "holder of the keys of unprecedented
spending," said Ludovic Subran, chief economist at Allianz. "It
will be reassuring for people to see she's very pragmatic in the
way that she addresses the crisis, similarly to how she was in her
role at the Fed."
Stock markets have begun the week on an optimistic note, as
accelerated Covid-19 vaccine rollouts begin to offset concerns
about the spread of the virus.
Portfolio managers are focusing on whether vaccines will be able
to cope with the mutations of the virus, and what that implies for
the possibility of future lockdowns, said Sebastien Galy, a macro
strategist at Nordea Asset Management.
Shares of major tech companies edged up, after faltering last
week. Facebook rose 1.3% and Apple was up 0.4%.
"There's a buy the dip mentality," said Mr. Galy. "Cynicism
doesn't last long, it shows that equities can still rally
significantly more."
Shares of laser maker Coherent surged 32% on the news that
Lumentum, a computer components firm, would buy it. Lumentum fell
10%.
Overseas, the pan-continental Stoxx Europe 600 declined 0.2%.
Jeep-owner Stellantis, the recently combined business of Fiat
Chrysler and PSA Group, gained 3.6%, extending Monday's pop after
it made its debut on French and Italian exchanges.
In Asia, most major benchmarks rose. Hong Kong's Hang Seng Index
advanced 2.7% and Japan's Nikkei 225 index added 1.4%, led by
shares of tech and car companies. The Shanghai Composite Index
slipped 0.8%.
In U.S. bond markets, the yield on the benchmark 10-year
Treasury note rose to 1.116% from 1.097% Friday, with the market
closed Monday for Martin Luther King Jr. Day.
Write to Anna Hirtenstein at anna.hirtenstein@wsj.com
(END) Dow Jones Newswires
January 19, 2021 10:22 ET (15:22 GMT)
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