By Anna Hirtenstein and Alexander Osipovich
The Nasdaq Composite and S&P 500 climbed to fresh records
Monday amid sharp swings in technology stocks and a big week for
corporate earnings.
The Nasdaq rose 92.93 points, or 0.7%, to close at 13635.99
after a choppy day of trading. The tech-heavy index jumped as much
as 1.4% in the morning, then turned negative and tumbled to a 1.3%
loss, before rebounding. There was no clear catalyst behind the
moves.
The S&P 500 gained 13.89 points, or 0.4%, to 3855.36, also a
record close. The Dow Jones Industrial Average dropped 36.98, or
0.1%, to 30960.00.
A raft of corporate earnings reports in the coming days is
expected to show which companies are thriving and which are
struggling amid the Covid-19 pandemic.
More than one-fifth of the 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. 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 U.S. stock market over the past year,
fueling a broad rally and driving wild moves in some stocks.
One of them, GameStop, more than doubled in value during
Monday's session but later pared gains to close with an increase of
$11.78, or 18%, to $76.79. 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.
Some other stocks that have captured the attention of small
investors also made big moves, such as movie-theater chain AMC
Entertainment, whose shares jumped 91 cents, or 26%, to $4.42.
"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.
Seven of the S&P 500's 11 sectors rose Monday, with
defensive sectors including utilities and consumer staples posting
the biggest gains.
Technology and social-media stocks were volatile. Apple climbed
$3.85, or 2.8%, to $142.92. Shares of data-analytics firm Palantir
Technologies advanced $3.65, or 11%, to close at $36.23 ahead of a
high-profile demo of its software planned for Tuesday. Palantir
stock had surged as much as 21% earlier in the day.
Meanwhile, Twitter fell 22 cents, or 0.5%, to $47.84, and online
marketplace Etsy sank $4.78, or 2.2%, to $208.81, with both stocks
retreating from morning gains.
Energy stocks and financials were among Monday's
underperformers. Chevron shares fell 83 cents, or 0.9%, to $90.90,
while Goldman Sachs dropped $6.35, or 2.2%, to $283.04, weighing on
the Dow.
In corporate news, shares of Kimberly Clark rose $4.30, or 3.3%,
to $136.51 after the maker of Kleenex and Huggies said it expects
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 $4.59, or 44%, to $14.95
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 fell 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 17:03 ET (22:03 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.