Stocks Rise Amid Big Earnings Day
By Will Horner
U.S. stocks rose Wednesday, led by shares of Netflix and other
The S&P 500 added 0.7%, while the tech-heavy Nasdaq
Composite advanced 1.2%. The Dow Jones Industrial Average were up
133 points to 31062.
Netflix led Wednesday's gains after the streaming giant reported
that total subscribers topped 200 million at the end of last year,
giving it enough cash to fund further growth without having to dip
into more debt. Shares jumped more than 12% to lead the S&P 500
higher and sparked a broader rally among its streaming competitors,
including Disney, Amazon.com and Roku.
The advance has so far solidified the stock market's upbeat week
ahead of the inauguration of Joe Biden, starting at noon Wednesday.
Investors remain optimistic that fiscal stimulus is supporting
businesses through the damage wrought by the Covid-19 pandemic,
with expectations of further spending by Democrats to keep the
economy on track.
That will pressure companies to deliver during this earnings
season and meet the market's expectations, said Brian O'Reilly,
head of market strategy at Mediolanum Investment Funds.
"Any company that is likely to miss or modestly disappoint on
earnings will be punished quite heavily," said Mr. O'Reilly. "A lot
of optimism has already been priced in and typically you don't get
too much room for maneuver when a stock is at a historic high."
Shares of UnitedHealth, for example, fell 1.3% after the
health-care company reported a smaller profit in the last quarter
Still, investors remain willing to reward companies that top
Wall Street's forecasts. Besides Netflix, shares of Morgan Stanley
added 1.5% after the bank reported a 51% increase in fourth-quarter
profit from a year earlier,
As earnings reports pick up, focus is likely to center on
sectors most exposed to the U.S. economy, such as banks and energy
companies, and those which have suffered the most during the
pandemic, such as leisure and hospitality, said Hugh Gimber, a
strategist at J.P. Morgan Asset Management.
"The most interesting thing will be how much leveling-off do we
see, how much are last year's laggards able to catch up," he
Overseas, the Stoxx Europe 600 index rose 0.7%. Shares of
Pearson rose nearly 6% after the British education publisher
reported sales growth, in part due to the increase in online
learning during the pandemic.
In Asia, stocks indexes were mixed. The Nikkei 225 ended the day
down 0.4%, while the Shanghai Composite Index rose 0.5%. Chinese
internet giant Alibaba jumped 8.5% in Hong Kong after the company's
embattled owner, Jack Ma, made his first public appearance in three
months, ending concerns about his whereabouts.
In Hong Kong, the Hang Seng Index gained 1.1% to hit a 20-month
high, with stocks buoyed in recent days by hefty inflows from
-- Michael Wursthorn contributed to this article.
Write to Will Horner at William.Horner@wsj.com
(END) Dow Jones Newswires
January 20, 2021 10:12 ET (15:12 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.