U.S. stocks opened higher Wednesday, as healthy corporate earnings reports support a rebound from a plunge that kicked off the week on fears that the spread of the delta variant of the coronavirus in many countries would slow the economic recovery from the pandemic.
What are major indexes doing?
The Dow Jones Industrial Average
rose 182.39 points, or 0.5%, to 34,694.38, joining other major benchmarks in turning positive for the week.
The S&P 500
was up 18.69 points, or 0.4%, at 4,341.75.
The Nasdaq Composite
added 33.37 points, or 0.2%, to trade at 14,532.25.
On Tuesday, stocks bounced sharply from the previous session’s steep selloff, with the Dow rising 549.95 points, or 1.6%, to close at 34,511.99. The S&P 500 rose 1.5%, while the Nasdaq Composite advanced 1.6%.
What’s driving the market?
Investors stuck by the “buy the dip” mantra after the Dow on Monday suffered its biggest one-day drop since October, a selloff attributed in large part to rising fears over the spread of the delta variant of the coronavirus in the U.S. and other countries.
Over the past two weeks, cases of Covid-19 have increased by 75% in the U.S., with a seven-day average approaching 30,000 a day. Daily deaths are up 25 percent last week, reaching an average of 250 per day, but are still way below the levels during the worst of the pandemic with about 68% of the adult population now vaccinated.
Analysts pegged a Tuesday bounce in stocks to ideas the selloff on Monday had been overdone in relation to the scope of the threat to the economic outlook from the pickup in cases. Strong earnings reports from tech giant IBM
Johnson & Johnson
and others reminded investors that business and the economy are still improving.
“While it is very difficult to predict the course of the pandemic, we don’t currently anticipate that the spread of the delta variant will pose a major threat to economic recoveries, at least across the developed world,” said Bethany Beckett, assistant economist at Capital Economics, in a note.
Worries about the pace of economic growth, however, are at last partly justified, she said. China’s slowdown is likely to continue and the research firm’s U.S. growth forecast was nudged down, “but the big picture is that we still expect U.S.growth to be strong in absolute terms, and we forecast that global growth will remain above trend until end-2022. This underpins our view that, while we don’t expect big gains in risky assets from here, a major setback is unlikely,” Beckett said.
Technical factors were also in play, with the S&P 500 index holding support at its 50-day moving average, viewed as an indicator of an asset’s short-term trend, though the bounce didn’t send the all-clear signal.
“Yesterday’s strong market performance was an ideal response to a pullback to support within a bullish trend but there are still reasonsto keep some cash on the sidelines,” said Kevin Dempter, analyst at Renaissance Macro, in a note.
“The divergence in breadth that we’ve seen suggests that there is vulnerability under the surface as the NYSE Cumulative Breadth Line and the percentage of issues trading above their 65-day moving average in the S&P 500 have both recently made lower lows,” he wrote.
Which companies are in focus?
late Tuesday revealed its worst quarter yet for adding new subscribers and said the current quarter would have fewer additions than Wall Street expected. Shares fell 1.7%.
- Shares of Johnson & Johnson were off 0.2% after the consumer and health company beat earnings estimates for the second quarter and raised its full-year guidance.
United Airlines Holdings Inc.
reported another quarterly loss Tuesday, but told investors it expected to turn a profit next quarter. Shares were up 1.7%.
Shares of Chipotle Mexican Grill Inc.
late Tuesday said revenue rose by nearly 40% in the second quarter. Shares rose 7.9%.
shares were up 2.5% after the beverage giant delivered results Wednesday that topped expectations.
Shares of Verizon Communications Inc.
rose more than 2% after the company reported earnings and revenue that beat forecasts while lifting its forecast.
Empower Retirement is acquiring Prudential Financial Inc.’s
full-service retirement business in a deal valued at $3.55 billion, the companies said Wednesday. Prudential shares rose 2%.
What are other markets doing?
- The yield on the 10-year Treasury note rose 5.7 basis points to 1.263%. Yields and debt prices move in opposite directions.
The ICE U.S. Dollar Index
a measure of the currency against a basket of six major rivals, rose 0.1%.
Oil futures were on the rise, with the U.S. benchmark
up 2.2% near $68.68 a barrel. Gold futures
edged lower, down 0.8%.
In European equities, the Stoxx Europe 600 index
rose 1.4%, while London’s FTSE 100
In Asia, the Shanghai Composite
rose 0.7%, Hong Kong’s Hang Seng Index
edged 0.1% lower and Japan’s Nikkei 225