Wall Street gained ground on Friday with upbeat earnings reports helping to drive optimism about the economy even as investors weighed a current surge in virus cases against hopes for successful COVID-19 vaccines.
After a volatile trading week where the market was whipsawed between hopes and fears around the virus, Cisco Systems Inc led gainers among the S&P 500 after its quarterly report showed a work-from-home driven surge in demand.
While the network gear maker jumped 7 per cent, Walt Disney Co rose 2 per cent as its rapidly growing streaming video business, and a partial recovery at its theme parks tempered its quarterly loss.
The reports likely helped investors look beyond a current surge in virus cases and a bleak winter ahead, said Tom Martin, senior portfolio manager at Globalt Investments in Atlanta.
“We know we’ve got some tough times ahead but mid-2021 you can potentially see that with a vaccine and better treatment instead of the coronavirus causing more damage you see that there’s a recovery ahead,” said Martin.
“You’re at that time of year when people are starting to look forward into 2021.”
Martin also pointed to hopes that Moderna Inc MRNA.O is close to releasing details of its vaccine progress, after the company said on Wednesday it had enough data for a first interim analysis of the late-stage trial of its experimental COVID-19 vaccine.
Friday’s outperformance of more economically sensitive sectors including energy, up 4 per cent, and industrials, up 1.9 per cent, over growth sectors like technology, up 0.5 per cent, was an indication of “optimism around the economy getting back on its footing,” according to Martin.
At 2:57 p.m. EST, the Dow Jones Industrial Average was up 398.05 points, or 1.37per cent, at 29,478.22, the S&P 500 had gained 43.88 points, or 1.24 per cent, to 3,580.89 and the Nasdaq Composite added 91.81 points, or 0.78 per cent, to 11,801.40.
With third-quarter reports released from about 90 per cent of S&P 500 companies Refinitiv IBES estimates now show profits falling 7.8 per cent from last year compared with an Oct. 1 expectation for a 21.4 per cent slump.
The three major United States stock indexes fell on Thursday as more than a dozen United States states reported a doubling of new COVID-19 cases in the last two weeks, with Chicago’s mayor issuing a month-long stay-at-home advisory.
But a senior adviser to President-elect Joe Biden said there were no plans for nationwide lockdowns next year, and instead talked about restrictions for specific regions when the virus spread is bad there.
Positive early data from a large vaccine study earlier this week had prompted a rotation into the cyclical sectors and put the S&P 500 and Dow on track for their second weekly gains in a row.
The tech-heavy Nasdaq, however, was headed for a weekly decline as investors booked profits in technology stocks, which have benefited from a stay-at-home environment.
Meanwhile, Biden’s victory in the battleground state of Arizona expanded his electoral vote margin, but the official transition remains in limbo as President Donald Trump refuses to concede.
Growth stocks, currently largely comprised of tech companies, edged 0.3 per cent higher, while value names, which currently include mostly cyclical stocks such as banks and energy, advanced 1.8 per cent.
Advancing issues outnumbered declining ones on the NYSE by a 4.44-to-1 ratio; on Nasdaq, a 2.49-to-1 ratio favoured advancers.
The S&P 500 posted eight new 52-week highs and no new lows; the Nasdaq Composite recorded 67 new highs and 11 new lows.
Edited By: Emmanuel Okara)
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