Stocks Turn Higher After Two Days of Declines
April 21 2021 - 11:12AM
Dow Jones News
By Caitlin Ostroff
U.S. stocks bounced higher after two consecutive days of
declines.
The S&P 500 was recently up 0.4%. The tech-heavy Nasdaq
Composite added 0.4%. The Dow Jones Industrial Average added about
175 points, or 0.5%.
Investors had recently put the brakes on what had been a furious
rally in stocks in recent weeks, leaving the major indexes hovering
near records. Some of the caution toward stocks eased on Wednesday,
as major indexes edged higher and recouped some of their
losses.
The retreat in U.S. stocks this week is simply a "normal pause"
in a bull market, with investors taking the opportunity to book
profits and reassess their risk appetite, said Luca Paolini, chief
strategist at Pictet Asset Management. "As long as the U.S. economy
is strong, it's not really worth the risk of betting against the
equity market."
Investors are also closely monitoring earnings to see if the
current valuations of expensive stocks can be justified. Chipotle
Mexican Grill is among companies that will post results after the
New York closing bell.
"We expect earnings to surprise on the upside, but the risks are
asymmetric. In an environment where markets are at record highs,
any company that doesn't deliver is really punished," said Mr.
Paolini. "Over the next few months the direction of earnings will
determine the direction of the market."
Netflix shares were the biggest loser in the S&P 500 on
Wednesday after the company said subscriber growth for the first
quarter was weaker than expected. The company's shares fell
7.9%.
In bond markets, the 10-year U.S. Treasury yield edged up to
1.573%, from 1.562% on Tuesday. Yields rise as prices fall.
A new wave of Covid-19 infections is sweeping through a number
of countries including India and Japan, raising the prospect of
fresh hurdles to the anticipated global economic rebound. Health
authorities are also warning that new variants may emerge that are
resistant to the existing batch of coronavirus vaccines.
"There are still risks in this market, particularly as it
relates to the vaccine rollout and virus mutations," said Shoqat
Bunglawala, head of international multiasset investments at Goldman
Sachs Asset Management. "We're still likely to be in an environment
with some volatility."
Overseas, the pan-continental Stoxx Europe 600 ticked 0.4%
higher after its biggest one-day drop since late December.
In Asia, most major stock indexes closed lower. Japan's Nikkei
225 fell 2%, while Hong Kong's Hang Seng declined 1.8%. The
Shanghai Composite Index ended the day relatively flat.
Gunjan Banerji contributed to this article.
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com
(END) Dow Jones Newswires
April 21, 2021 10:57 ET (14:57 GMT)
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