Stocks Poised to Snap Two-Day Losing Streak
By Caitlin Ostroff and Gunjan Banerji
U.S. stocks bounced higher after two consecutive days of
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 stocks edged higher and recouped some of their losses.
The S&P 500 was recently up 0.7%. The tech-heavy Nasdaq
Composite added 0.8%. The Dow Jones Industrial Average added about
260 points, or 0.8%.
Some analysts said the recent stretch of declines was a healthy
pause for stocks.
"I think that the market will continue to grind higher," said
Mike Lewis, head of U.S. equities cash trading at Barclays.
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 Luca
Paolini, chief strategist at Pictet Asset Management. "Over the
next few months the direction of earnings will determine the
direction of the market."
That was on display Wednesday. Netflix was the biggest loser in
the S&P 500 after the company said subscriber growth for the
first quarter was weaker than expected. The company's shares fell
Still, declines in shares of Netflix and other tech giants like
Facebook were outweighed by gains in shares of more cyclical
companies like cruise-operators and retailers. And some analysts
have said these groups can continue to outperform. JPMorgan Chase
strategists said in a note to clients on Tuesday that they expect
cyclical sectors like energy and financials stocks to perform
Norwegian Cruise Line was one of the best performers in the
S&P 500 on Wednesday, adding 8.4%. Carnival advanced 5%.
In bond markets, the 10-year U.S. Treasury yield edged up to
1.571%, from 1.562% on Tuesday. Yields rise as prices fall.
Still, 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 0.7%
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.
Write to Caitlin Ostroff at email@example.com and Gunjan
Banerji at Gunjan.Banerji@wsj.com
(END) Dow Jones Newswires
April 21, 2021 14:30 ET (18:30 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.