Wall Street rises on upbeat earnings, recovery optimism

The street signs for Wall St and Broad St hang at the corner outside the New York Stock Exchange on March 24, 2015. — Reuters pic
The street signs for Wall St and Broad St hang at the corner outside the New York Stock Exchange on March 24, 2015. — Reuters pic

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NEW YORK, July 21 — Wall Street’s main indexes rose today as upbeat quarterly results from companies including Verizon and Coca-Cola reignited optimism about the health of corporate America.

Coca-Cola Co rose 1.9 per cent after boosting its full-year sales forecast, while Verizon Communications Inc added 1.1 per cent after it beat estimates for quarterly results.

“Everybody knows this is going to be the biggest year-over-year growth rate for earnings in the second quarter,” said Tom Martin, senior portfolio manager at GLOBALT Investments.

Wall Street ended sharply higher on Tuesday, rebounding from a multi-day losing streak, as a string of upbeat earnings reports and revived economic optimism fuelled a risk-on rally.

“There-is-no-alternative (TINA) and fear-of-missing-out (FOMO) are driving the market higher. Every time there’s a dip in the market, people think that’s the opportunity to put more money to work,” Martin said.

Ten of the 11 major S&P sectors advanced in early trading, with economically sensitive industrials, materials, financials and energy leading gains.

The rate-sensitive banking sub-index added 1.9 per cent, tracking Treasury yields.

Market participants are also closely watching the second-quarter earnings season to justify sky-high valuations at which the market trades right now.

For the year so far, the benchmark S&P 500 index has gained 15.8 per cent on optimism about a stronger recovery due to vaccinations and favourable monetary policy.

United Airlines rose 4.2 per cent after its revenue quadrupled from a year ago and topped estimates with a strong domestic travel rebound.

Rivals American Airlines and Southwest Airlines added more than 3.5 per cent each ahead of their results tomorrow.

However, a weak subscriber growth projection by Netflix Inc, which benefited from the stay-at-home environment last year, pushed its shares down 3.6 per cent.

At 10.07am ET, the Dow Jones Industrial Average was up 267.57 points, or 0.78 per cent, at 34,779.56, the S&P 500 was up 25.89 points, or 0.60 per cent, at 4,348.95 and the Nasdaq Composite was up 59.54 points, or 0.41 per cent, at 14,558.42.

Chipotle Mexican Grill Inc gained 9.2 per cent as brokerages raised their price targets on the burrito chain’s stock after it beat estimates for earnings and comparable quarterly sales.

Interpublic Group of Companies jumped 13.4 per cent to the top of the S&P 500 index after the advertising firm posted an upbeat second-quarter profit.

Johnson & Johnson edged 0.1 per cent after the drugmaker forecast upbeat 2021 earnings, while Harley-Davidson Inc fell 3.6 per cent even as it reported a better-than-expected quarterly profit.

Advancing issues outnumbered decliners by a 3.88-to-1 ratio on the NYSE and by a 3.20-to-1 ratio on the Nasdaq.

The S&P index recorded 31 new 52-week highs and no new low, while the Nasdaq recorded 31 new highs and 19 new lows. — Reuters

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