Dow closes up more than 285 points as stocks extend rebound rally

This post was originally published on this site

U.S. stocks closed higher for a second day Wednesday, as healthy corporate earnings reports helped support a rebound from a plunge on Monday on fears that the spread of the delta variant of the coronavirus in many countries would slow the economic recovery from the pandemic.

What did major indexes do?
  • The Dow Jones Industrial Average DJIA, +0.83% rose 286.01 points or 0.83% today to 34,798.00, joining other major benchmarks in turning positive for the week.
  • The S&P 500 SPX, +0.82% was up 35.63 points or 0.82% today to 4,358.69.
  • The Nasdaq Composite COMP, +0.92% added 133.08 points or 0.92% today to 14,631.95.

On Tuesday, stocks bounced sharply from the previous session’s steep selloff, with the Dow rising 549.95 points, or 1.6%, to close at 34,511.99. The S&P 500 rose 1.5%, while the Nasdaq Composite advanced 1.6%.

What drove the market?

Investors stuck by the “buy the dip” mantra after the Dow on Monday suffered its biggest one-day drop since October, a selloff attributed in large part to rising fears over the spread of the delta variant of the coronavirus in the U.S. and other countries.

Strong earnings reports from tech giant IBM IBM, Coca-Cola KO, Johnson & Johnson JNJ and others reminded investors that business and the economy are still improving.

“Earnings season is off to a solid start, with results beating bumper expectations in the second quarter,” Craig Erlam, Senior Market Analyst, at OANDA wrote. “The positivity that’s driving the market is clearly offsetting fears about another wave for now, aided no doubt by belief in the vaccine to stop surges turning into severe lockdowns in most cases.”

Worries about the pace of economic growth, however, are at last partly justified, said Bethany Beckett, assistant economist at Capital Economics, in a note. China’s slowdown is likely to continue and the research firm’s U.S. growth forecast was nudged down, “but the big picture is that we still expect U.S.growth to be strong in absolute terms, and we forecast that global growth will remain above trend until end-2022. This underpins our view that, while we don’t expect big gains in risky assets from here, a major setback is unlikely,” Beckett said.

Need to Know: This technical support shows the strength of the buy-the-dip force in markets

The major U.S. stock market indexes have mostly recovered to levels near last Friday’s close and remain near record highs. The S&P 500 notched its biggest back-to-back advance since May 14. Gains were led by companies that stand to benefit the most from economic recovery, such as the financial and industrial sectors, while the Russell 2000 index RUT, +1.81% rose 1.8%.

Wednesday brought no fresh U.S. economic data, but investors will watch U.S. weekly jobless claims on Thursday after they last week fell to a new pandemic low.

Which companies were in focus?
What did other markets do?
  • The yield on the 10-year Treasury TMUBMUSD10Y, 1.291% note rose almost 7 basis points to 1.293%. Yields and debt prices move in opposite directions.
  • The ICE U.S. Dollar Index DXY, -0.21%, a measure of the currency against a basket of six major rivals, fell 0.2%.
  • Oil futures were on the rise, with the U.S. benchmark CL00, +4.49% up 4.5% near $70.21 a barrel. Gold futures GC00, -0.42% edged lower, down 0.4%.
  • In European equities, the Stoxx Europe 600 index SXXP, +1.65% rose 1.6%, while London’s FTSE 100 UKX, +1.70% gained 1.7%.
  • In Asia, the Shanghai Composite SHCOMP, +0.73% rose 0.7%, Hong Kong’s Hang Seng Index HSI, -0.13% edged 0.1% lower and Japan’s Nikkei 225 NIK, +0.58% gained 0.6%.