Shares lengthen their rally with the S&P 500 and Nasdaq hitting the fifth straight day of earnings
US stocks rose on Wednesday, aided by banks and the reopening of stocks, as 10-year government bond yields rose.
The Dow Jones Industrial Average rose 39.24 points, or 0.1%, to 35,405.50. The S&P 500 rose 0.2% to a new closing high of 4,496.19. The Nasdaq Composite rose 0.1% to 15,041.86, also a new closing high.
The benchmark ten-year government bond yield rose as high as 1.352% on Wednesday, its highest level since the beginning of the month when it returned as high as 1.364%. As a result, JPMorgan’s shares rose 2% while Wells Fargo rose 1.9%. Zion’s regional banks rose 1.6% and Regions Financial rose 1.5%. The fifth third added 2.2%.
Travel and leisure stocks were also higher. Several airlines and cruise lines were up 1% for most of the session. Casino stocks Penn National Gaming and Caesars Entertainment gained 8.6% and 4% respectively. MGM Resorts added 2.9%.
Chipmakers were higher, with Western Digital gaining 7.8% after a Wall Street Journal report said the company is in advanced talks to merge with Japan’s Kioxia Holdings. Nvidia stock rose 1.9% after the Department of Energy announced that their new supercomputer will run on the company’s computing platform. Micron Technology also gained 2.8%.
Markets have been bolstered by signs that delta variant cases may be peaking. Fundstrat’s Tom Lee said in a customer note late Tuesday that the worst may be behind us, citing declining positivity rates in Florida and Texas.
“We are aware that the stock markets have been restless and the wide variance in perspectives means that investors do not have a simple consensus. But our central case remains that we continue to switch to full risk tolerance with an ‘all rallies’ to the Year-end, Lee wrote, “The frequency of incoming data has improved in recent days, with the peak of COVID-19 cases being most notable in a number of states.”
Johnson & Johnson said Wednesday that its Covid vaccine booster shot had shown promising results in early clinical trials and had significantly increased antibodies to viruses. Nevertheless, the share fell slightly.
Delta Air Lines announced on Wednesday that it would increase health insurance premiums for unvaccinated employees to cover higher Covid costs. The company employs around 75,000 people, around 75% of whom are fully vaccinated. On Tuesday, Goldman Sachs is demanding that employees entering their offices be fully vaccinated. Delta and Goldman added 1.9% and 1.1% respectively.
Christopher Harvey, head of equity strategy at Wells Fargo Securities, also sees further gains in sight. He raised his S&P 500 year-end target to 4,825 on Tuesday, about 7.5% above the index’s daily close. Harvey’s reputation is based on its strength through August and carries over into the last few months of the year.
“In the past 31 years there have been nine cases in which the S&P 500 achieved a price return of more than 10% in the first eight months of the year; in the next four months the index averaged a further + 8.4% instances in the last four months achieved a negative return, “he wrote in a statement to his clients.
Dick’s Sporting Goods shares rose 13.3% to hit an all-time high on Wednesday after reporting strong quarterly earnings.
The much-anticipated Jackson Hole Symposium begins Thursday, when central bankers may release updates on their plan to reduce monetary stimulus. The Federal Reserve has bought at least $ 120 billion in bonds a month to contain longer-term interest rates and stimulate economic growth as the pandemic ravages the economy.
Chairman Jerome Powell is due to comment on Friday.
“Taper talk is the concern, but if inflation continues to heat up and economic data continues to be mixed, the timing for the tapering could be postponed,” said Lindsey Bell, chief investment strategist at Ally Invest. “The Fed is unlikely to force an economic slowdown that isn’t ready, and the outlook becomes more uncertain as the delta rises.”
Bell added that the determining factor could be the August job report due September 3, as Covid cases skyrocketed last month with the spread of the Delta variant.
Several tech companies will report their results on Wednesday after the market closes, including the Dow component Salesforce. Box and Snowflake are also on deck.
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