Wall Street bounces on renewed economic optimism

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A person walks past the New York Stock Exchange (NYSE) in New York, New York, United States, July 19, 2021. REUTERS / Andrew Kelly

  • Banks, small caps, transport outperform
  • Netflix slumps in after-hours trading after valuation failure
  • Chiplotle Advances Post-Market After Higher Same Store Sales
  • Indexes up: Dow 1.62%, S&P 1.52%, Nasdaq 1.57%

NEW YORK, July 20 (Reuters) – Wall Street closed sharply higher on Tuesday, rebounding from a multi-day losing streak as a series of positive earnings reports and renewed economic optimism fueled a rally in the risk.

The three major US stock indexes gained more than 1% with the Dow blue chips, on the heels of its worst day in nine months, leading the charge.

The S&P recorded its first advance in four days and recorded its best day since March. The Nasdaq posted its first gain in six sessions.

“It’s a downward buying mentality coming into the market,” said Chuck Carlson, managing director of Horizon Investment Services in Hammond, Indiana.

Economically sensitive small caps (.RUT) and transportation (.DJT) outperformed the broader market.

Benchmark US Treasury yields rebounded from their five-month lows, following their largest single-session decline since February in the previous session. This helped boost vulnerable banks to interest rates (.SPXBK) of 2.6%.

“Economically sensitive stocks are on the rise today,” added Carlson. “When the 10-year (Treasury yield) goes down in a short period of time, that usually doesn’t happen with an economy that’s supposed to grow. The strengthening of the 10-year (yield) indicates that maybe the economy is not going to fall. ‘a cliff.”

Growing concerns over the highly contagious Delta variant of COVID-19, now responsible for the majority of new infections, have sparked massive sales in recent sessions as vaccination efforts around the world gain momentum. Read more

“Things like the Delta variant can definitely impact the margins,” Carlson said. “It doesn’t take a lot of fear from some investors to create what we saw yesterday.”

For an interactive graphic on vaccine deployment and availability around the world, Click here.

The Dow Jones Industrial Average (.DJI) rose 549.95 points, or 1.62%, to 34,511.99, the S&P 500 (.SPX) gained 64.57 points, or 1.52%, to 4,323.06 and the Nasdaq Composite (.IXIC) added 223.89 points, or 1.57%, to 14,498.88.

Of the top 11 sectors of the S&P 500, all except consumer staples (.SPLRCS) closed green. Industrials (.SPLRCI) fared the best, up 2.7%.

The second quarter reporting season is in full swing, with 56 of the S&P 500 companies reporting results. Of those, 91% exceeded the consensus, according to Refinitiv.

Analysts are now forecasting S&P annual earnings growth of 72.9% for the April-June period, a significant improvement from the 54% growth seen at the start of the quarter.

Halliburton Co (HAL.N) rose 3.7% after a rebound in crude prices boosted demand for oil services, leading the company to post its second consecutive quarterly profit. Read more

Peloton Interactive Inc (PTON.O) rose 6.7% after announcing it would provide fully insured members of UnitedHealth Group (UNH.N) with free access to its live and on-demand fitness classes. Read more

Moderna (MRNA.O) shares fell 2% in a volatile session on Tuesday, with the COVID-19 vaccine maker being the most-traded company on Wall Street ahead of its S&P 500 debut on Wednesday. L1N2OW2AK

Shares of Netflix Inc (NFLX.O) fell more than 3% in after-hours trading after its forecast missed estimates. Read more

Shares of Chipotle Mexican Grill (CMG.N) gained more than 2% post-market after its earnings and revenue exceeded consensus.

The advancing issues outnumbered the declining ones on the NYSE by a ratio of 4.44 to 1; on the Nasdaq, a ratio of 3.59 to 1 favored advances.

The S&P 500 posted 41 new 52-week highs and no new lows; the Nasdaq Composite recorded 45 new highs and 76 new lows.

Volume on the US stock exchanges was 10.62 billion shares, compared to an average of 10.19 billion over the last 20 trading days.

Reporting by Stephen Culp; Additional reporting by Devik Jain and Shreyashi Sanyal in Bengaluru and Noel Randewich in New York; Editing by Cynthia Osterman

Our standards: Thomson Reuters Trust Principles.


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