By Anna Hirtenstein and Alexander Osipovich
U.S. stocks climbed amid a flurry of earnings reports and
testimony by Janet Yellen in which she endorsed higher coronavirus
The Dow Jones Industrial Average rose 126 points, or 0.4%, in
midday trading. The S&P 500 advanced 0.6%, while the
technology-heavy Nasdaq Composite was up 1%.
The gains came as U.S. markets reopened after a long holiday
weekend and followed a decline in the three major indexes last
Earnings season kicked into high gear. Shares of Bank of America
gained 1.5% after it reported a 22% profit decline in the fourth
quarter, but still came ahead of analysts' forecasts. Goldman Sachs
slumped 1.1% despite releasing earnings that 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 backed major fiscal stimulus to help workers and
businesses harmed by the coronavirus pandemic as she testified
before the Senate Finance Committee, which will vote on her
nomination for Treasury secretary. In prepared remarks, she said
the U.S. risks a longer, more painful recession unless Congress
approves more aid, and encouraged them to "act big" to shore up the
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
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."
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
Eight of the S&P 500's 11 sectors were in positive territory
on Tuesday. Energy stocks posted the biggest gains, boosted by
rising oil prices. Futures on Brent crude, the global oil
benchmark, gained 2% to $55.83 a barrel on hopes that stimulus and
vaccinations will boost energy demand.
Shares of General Motors rallied 9.8% after its driverless-car
startup, Cruise, said it had entered into a technology partnership
with Microsoft, which is also joining a group of companies set to
invest more than $2 billion in Cruise. The stock is on course for a
Shares of big tech companies climbed, after faltering last week.
Facebook rose 2.1% and Apple wedged up 0.3%.
"There's a buy the dip mentality," said Mr. Galy. "Cynicism
doesn't last long, it shows that equities can still rally
In other corporate news, shares of laser maker Coherent surged
32% after it agreed to be acquired by Lumentum, a computer
components firm. Lumentum stock fell 12%.
Overseas, the pan-continental Stoxx Europe 600 declined 0.2%.
Jeep-owner Stellantis, the recently combined business of Fiat
Chrysler and PSA Group, gained 2.6%, 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
In U.S. bond markets, the yield on the benchmark 10-year
Treasury note inched up to 1.102% from 1.097% Friday, with the
market closed Monday for Martin Luther King Jr. Day.
Write to Anna Hirtenstein at email@example.com and
Alexander Osipovich at firstname.lastname@example.org
(END) Dow Jones Newswires
January 19, 2021 12:44 ET (17:44 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.