Stocks Open Higher as Market Rally Extends
February 10 2021 - 10:03AM
Dow Jones News
By Will Horner
Stocks climbed in early trading Wednesday, suggesting that the
major indexes may hit new records.
The S&P 500 added 0.5% and the Dow Jones Industrial Average
gained 0.4%. The technology-heavy Nasdaq Composite Index advanced
0.7%. All three indexes were on an early pace to close at fresh
highs. Both the S&P 500 and the Dow closed lower on Tuesday
after notching record highs earlier in the week.
Stocks have pushed higher this month, with the benchmark S&P
500 notching its eighth record close of the year on Monday.
Investors are betting that President Biden's $1.9 trillion stimulus
package will help bolster the economy while vaccinations help
reduce Covid-19 fatalities. Investor sentiment has also been buoyed
by companies' quarterly results that have largely proved to be
better than expected.
"As long as earnings estimates are going up, stocks are going
up," said Andrew Slimmon, a managing director and portfolio manager
at Morgan Stanley Investment Management. "The magnitude of the
earnings beats we have seen are so great because earnings have been
way underestimated."
Ahead of the opening bell, ride-hailing firm Lyft rose over 10%
after posting a narrower annual loss, suggesting the company is
moving toward profitability. Rival Uber Technologies is among the
companies scheduled to release its results after the market closes.
Uber rose more than 6% premarket.
Twitter jumped 9% in premarket trading after the social-media
company said late Tuesday that it added users through the holiday
period. Cisco Systems fell almost 5% after its fiscal
second-quarter revenue and profit declined.
Coca-Cola rose over 2% after the soda giant said early Wednesday
that it expects its 2021 organic revenue to grow by a
high-single-digit percentage.
U.S. inflation data, an important indicator of the health of the
economy, showed consumer prices posted slow and steady gains for
January.
"These will be given undue attention because we have gone
through an unprecedented period," Altaf Kassam, head of investment
strategy for State Street Global Advisors in Europe, said before
the data was released. "There are definitely some inflationary
signals in the background, but the inflation numbers we have seen
recently have been pretty soft."
Investors are concerned about whether rebounding consumer demand
and another sizable stimulus package could see inflation rise
steeply, or push the fiscal deficit too high, Mr. Kassam added.
"No one is worried about the size of the stimulus package, as
long as it is quite big," he said. "The challenges are more on
whether it is too big and whether you can have too much of a good
thing," he said.
Comments from Federal Reserve Chairman Jerome Powell, scheduled
for 2 p.m. ET, are also likely to be closely scrutinized for any
hints on the health of the economy and future moves on monetary
policy.
U.S. Treasury yields, which move inversely to the price, ticked
down to 1.147% after settling at 1.156% on Tuesday.
Overseas, the Stoxx Europe 600 edged up 0.3%.
In China, the Shanghai Composite advanced 1.4% to close at its
highest level since August 2015. This was its last trading day
before the Lunar New Year holidays. Distiller Kweichow Moutai, the
biggest stock in the index, leapt 5.9% to a record closing
high.
Optimism about China's economy, rising corporate earnings, and
global vaccine rollouts have helped lift market sentiment recently,
said Wei Wei Chua, a portfolio manager at Mirae Asset Global
Investments.
A rush of new mutual-fund launches, plus an increase in
individual investors buying stocks through mobile apps, had also
injected fresh money into the market, Mr. Chua added. "It is a
positive feedback loop and people don't really want to miss out
when the markets are doing well, " he said.
Hong Kong's Hang Seng Index rose 1.9% by the close of trading,
while Japan's Nikkei 225 gained 0.2%.
--Joanne Chiu contributed to this article.
Write to Will Horner at William.Horner@wsj.com
(END) Dow Jones Newswires
February 10, 2021 09:48 ET (14:48 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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