NEW YORK, Jul 21 (Reuters) – Wall Street posted its second straight rise on Wednesday as robust corporate earnings and renewed optimism about the US economic recovery fueled investor risk appetite.
All three major US stock indices added on gains from the previous session, placing all three within 1% of their all-time closing highs.
Economically sensitive small caps (.RUT), semiconductors (.SOX) and financial stocks (.SPSY) outperformed the broader market.
“It’s a swing between big wins and a recovering market and concerns about whether the economy will slow due to the (COVID-19) Delta variant,” said Peter Tuz, president of the Chase Investment Counsel in Charlottesville, Virginia. “But we’re seeing strong gains with generally positive forecasts and a feeling that (the delta variant) can be managed.”
A rebound in travel helped United Airlines (UAL.O) revenue grow, which in turn helped increase the S&P 1500 Airlines (.SPCOMAIR) and Hotels / Restaurant / Recreation (.SPCOMHRL) indices.
“Earlier this week, these stocks suffered on renewed fears that travel would slow down and all related industries will suffer, but those fears are gone,” added Tuz. “Demand continues as expected. I don’t think Delta fear is making people change their plans.”
US Treasury benchmark yields continued to recover from a five-month low after a weak 20-year bond auction that benefited interest-rate banks.
“People are being comforted by 10-year bonds, which is a sign of recovery,” said Tuz. “Today there is an escape from safety.”
The controversy in Washington over a $ 1.2 trillion bipartisan infrastructure package progressed as Senate Democrats steered toward a proposed procedural vote despite Republican appeals for a delay. Continue reading
Unofficially, the Dow Jones Industrial Average (.DJI) rose 285.75 points, or 0.83%, to 34,797.74, the S&P 500 (.SPX) gained 35.59 points, or 0.82%, to 4,358.65, and the Nasdaq Composite (.IXIC) gained 133.08 points or 0.92% to 14,631.95.
Of the 11 key sectors in the S&P 500, energy stocks (.SPNY) were the big winners, aided by soaring crude oil prices.
The reporting season for the second quarter is in full swing, with 73 of the companies in the S&P 500 having published results. Of these, 88% exceeded consensus expectations.
Current estimates show aggregate earnings growth for the S&P 500 of 75% year-over-year for the April to June period, a significant increase from the 54% growth at the beginning of the quarter.
Among the winners, Chipotle Mexican Grill (CMG.N) hit a record high after the burrito chain beat earnings estimates and forecast strong sales growth in the current quarter. Continue reading
Coca-Cola (KO.N) increased after raising the annual forecast. Continue reading
Verizon Communications (VZ.N) rose after its bottom line, which was driven by growing demand for its 5G services. Continue reading
Drug maker Johnson & Johnson (JNJ.N) forecast $ 2.5 billion in sales for its one-off COVID vaccine this year and increased its sales estimates. Continue reading
On the losing side, Netflix Inc (NFLX.O) reported slower subscriber growth late Tuesday, which caused stocks to decline. Continue reading
Harley-Davidson’s second quarter results release (HOG.N) showed that the turnaround plan appeared to be making headway, but the company lowered its forecast for operating income due to tariffs from Europe, its second largest market. Continue reading
Reporting by Stephen Culp; Additional coverage from Devik Jain and Shreyashi Sanyal in Bengaluru; Editing by Cynthia Osterman
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