By Caitlin McCabe and Caitlin Ostroff
The Nasdaq Composite rallied to a record close Thursday as
investors showed renewed interest in megacap technology companies
ahead of their earnings reports in the weeks ahead.
The technology-heavy index climbed 73.67 points, or 0.5%, to
13530.91, propelled higher by shares of Apple, Facebook and
Amazon.com. The day marked the Nasdaq's third consecutive day of
gains and its fourth record close of the year.
Gains for the Nasdaq came amid an otherwise bumpy session for
U.S. stocks, with both the S&P 500 and the Dow Jones Industrial
Average swinging between small gains and losses throughout the day.
The S&P 500 ultimately eked out a gain to finish at a record
high, rising 1.22 points, or less than 0.1%, to 3853.07.
The Dow Jones Industrial Average, meanwhile, fell 12.37 points,
or less than 0.1%, to 31176.01.
Despite a turbulent start to 2021, U.S. stocks have largely
continued to climb, with all three indexes currently up 1.9% or
more year-to-date. The Nasdaq, in particular, has posted a strong
performance, gaining 5% for the year, while the Russell 2000 index
of small-cap stocks has risen 8.4%.
Driving some of those gains has been optimism that further
economic recovery may be ahead under President Biden's new
administration. Mr. Biden has called for a $1.9 trillion Covid-19
relief plan that includes direct payments to households and more
money for testing and vaccine distribution. On Wednesday, the day
that Mr. Biden took office, the S&P 500 and the Dow posted
their best Inauguration Day performances since 1985, when Ronald
Reagan was sworn in for his second term, according to Dow Jones
Better-than-expected earnings reports so far this season have
also buoyed markets recently.
Still, the U.S. economy faces major obstacles, with fresh data
Thursday showing that about 900,000 workers filed for unemployment
benefits for the week ended Jan. 16, as companies continued to lay
off workers amid a surge in Covid-19 cases.
Meanwhile, the coronavirus pandemic continues to loom large. The
U.S. recorded 4,375 deaths for Wednesday, the second-highest daily
Analysts say those factors -- along with Netflix's strong
earnings this week -- have renewed investor interest for
"stay-at-home stocks" that were popular for much of 2020. Apple
gained $4.84, or 3.7%, to $136.87. Amazon.com added $43.61, or
1.3%, to $3,306.99.
"You've got this rotation going on under the surface for a
second day in a row where the small-cap stocks and the cyclical
plays have been giving some back to the tech and stay-at-home
areas," said Ryan Detrick, chief market strategist for LPL
"That's the lifeblood of a bull market -- to see a rotation," he
Traders this month have been closely eyeing earnings to see if
they support the strong run across markets in recent months. Many
investors are still betting on an economic recovery this year as
Covid-19 vaccinations ramp up, increasing prospects for future
Earning results so far have been better than expected, and as of
early Thursday afternoon, the percentage of S&P 500 companies
that have beat estimates hovered slightly below 90%, according to
FactSet. Several companies have been rewarded by investors for the
strong earnings results.
Shares of Travelers, one of the nation's biggest sellers of
insurance to businesses and a top consumer-car insurer, climbed
$3.70, or 2.6%, to $148.72 Thursday after reporting its net income
surged in the fourth quarter.
"Earnings season looks relatively good and seems to confirm this
picture that the U.S. -- because there was no full lockdown -- did
well in the fourth quarter," said Carsten Brzeski, ING Groep's
global head of macro research. "Stock markets are really looking
through the short-term outlook for the economy, which has worsened
over recent days."
Investors are also paying close attention to corporate guidance
in the sectors most affected by the pandemic. Shares of United
Airlines fell $2.59, or 5.7%, to $42.59 after the airliner said
late Wednesday it expected the coronavirus to continue to weigh on
travel demand this year.
In other corporate news, Ford Motor climbed 67 cents, or 6.2%,
to $11.53, its highest close since June 2018. Shares of the company
have jumped on upbeat analyst outlooks. Ford also holds a stake in
electric-vehicle startup Rivian Automotive, which raised another
$2.65 billion earlier this week.
Supporting markets is also the expectation that central banks
and governments will step in if financial conditions deteriorate.
This has encouraged investors to seek out higher returns, including
in overseas markets.
Japan's Nikkei 225 Index rose 0.8% Thursday. India's benchmark
stock gauge, the S&P BSE Sensex Index, hit a record Wednesday.
Indexes in China and South Korea rallied Thursday, with the
Shanghai Composite up 1.1% and Korea's Kospi gaining 1.5%.
The pan-continental Stoxx Europe 600 added less than 0.1% after
the European Central Bank held steady on interest rates.
The backstop from governments and central banks -- plus
consensus among investors for a strong economic recovery this year
-- has lessened volatility. The Cboe Volatility Index, known as the
VIX and seen as Wall Street's fear gauge, was at 21.32 Thursday,
down from 25.16 a month ago, but higher than the 19.48 historical
average for the VIX.
The yield on the benchmark 10-year Treasury note ticked up to
1.107% Thursday, from 1.089% Wednesday. Yields rise when bond
Write to Caitlin McCabe at email@example.com
(END) Dow Jones Newswires
January 21, 2021 17:20 ET (22:20 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.