By Anna Hirtenstein and Alexander Osipovich
The Nasdaq Composite climbed to a closing record Monday amid
sharp volatility in technology stocks and a big week for corporate
earnings.
The Nasdaq finished higher by 0.7%. The tech-heavy index jumped
as much as 1.4% after the opening bell, then turned negative and
tumbled to a 1.3% loss before rebounding. It ended last week at
record levels.
The Dow Jones Industrial Average dropped 0.1%, while the S&P
500 added 0.4% to close at a record.
A raft of corporate earnings reports in the coming days is
expected to show which corporations are thriving and which are
struggling amid the Covid-19 pandemic.
More than one-fifth of the broad S&P 500 index and one-third
of Dow components are scheduled to release earnings this week.
Starbucks, Verizon and Microsoft are slated for Tuesday. Other
major tech firms are reporting later in the week, including Apple,
Tesla and Facebook on Wednesday.
"The way that management will communicate their outlook will be
key for markets," said Sophie Chardon, a cross-asset strategist at
Lombard Odier. "Investors will have to weigh the possibility of
vaccinations with the reality of new lockdowns" and the impact on
each company.
Concerns about Covid-19 vaccine supplies have also sent jitters
through the markets. Pharmaceutical giant Merck scrapped its plans
to develop a Covid-19 vaccine after trials yielded disappointing
results, pulling a major player out of the coronavirus vaccine
race. Its shares were roughly flat.
Merck's announcement came after AstraZeneca warned on Friday
that its vaccine deliveries to the European Union would lag
projections.
"The vaccine rollout is not as speedy or smooth as we had hoped
in November," said Liz Ann Sonders, chief investment strategist at
Charles Schwab.
Stumbles in the vaccination drive and the spread of new
coronavirus variants have helped fuel recent gains in tech stocks.
The biggest tech companies are seen as benefactors from
stay-at-home orders, as firms and households increase their use of
digital technology when operating remotely.
"You're getting rotation out of the more cyclical stocks. These
big tech stocks are perceived as a bit of a haven trade," said
Michael Hewson, chief market analyst at CMC Markets.
Tech shares have also been a favorite of individual investors
who have poured into the stock market over the past year, fueling a
broad rally and driving wild moves in some stocks.
One of them, GameStop, was up 18% on Monday, paring gains after
it more than doubled in value earlier in the day. The videogame
retailer has been at the center of a fight between bullish day
traders communicating on the internet forum Reddit, and short
sellers, who bet heavily against the stock.
Other stocks that have captured the attention of small investors
also made big moves on Monday. Retailer Bed Bath & Beyond
climbed nearly 5% while movie-theater chain AMC Entertainment
jumped more than 25%.
"The newly minted traders are using message boards and causing
just really nutty stuff to happen," Ms. Sonders said.
Investors also are monitoring negotiations over President Joe
Biden's plan for additional fiscal stimulus to combat fallout from
the pandemic. His proposal for a $1.9 trillion spending package is
likely to be a major topic of discussion among U.S. lawmakers this
week.
Technology and social-media stocks were volatile. Apple was up
2.3%. Data-analytics firm Palantir Technologies advanced 11% ahead
of a high-profile demo of its software planned for Tuesday, paring
gains after surging as much as 21% earlier.
Meanwhile, Twitter fell 0.4%% and online marketplace Etsy sank
2.1% with both stocks retreating from morning gains.
Energy stocks and financials were among Monday's
underperformers. Chevron shares fell 0.9%, while Goldman Sachs
dropped 2.2%, weighing on the Dow.
In corporate news, shares of Kimberly Clark rose 3.2% after the
maker of Kleenex and Huggies said it expects net sales to rise in
2021, raised its quarterly dividend and unveiled a $5 billion
share-buyback program.
Real-estate firm Tishman Speyer's special-purpose acquisition
company TS Innovation Acquisitions soared nearly 45% after it said
it would merge with Latch, a smart-lock maker, to take the company
public.
Overseas, the pan-continental Stoxx Europe 600 fell 0.8%, which
analysts attributed to reports that the U.K. and France were
heading toward tighter lockdown measures.
In Asia, most major stock benchmarks rose. The Shanghai
Composite Index added 0.5% and Hong Kong's Hang Seng Index climbed
2.4%, buoyed by the rally in tech shares.
South Korea's Kospi Index advanced 2.2%. The index's heavyweight
Samsung Electronics rose 3% and chip maker SK Hynix rallied over
5%. Both are slated to report earnings this week.
China's most valuable internet company, Tencent Holdings, jumped
nearly 11% to a record in Hong Kong trading. Tencent portfolio
company Kuaishou Technology, a TikTok-like video-recording app,
announced a coming initial public offering that may value it at
about $60 billion.
In bond markets, the yield on the benchmark 10-year U.S.
Treasury bond edged down to 1.038%, from 1.090% Friday.
Write to Anna Hirtenstein at anna.hirtenstein@wsj.com and
Alexander Osipovich at alexander.osipovich@dowjones.com
(END) Dow Jones Newswires
January 25, 2021 16:20 ET (21:20 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.