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Investors turn to stocks as they shrug off COVID worries

EconomyJul 21, 2021 02:51PM ET
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2/2 © Reuters. FILE PHOTO: A staff member of the Tokyo Stock Exchange (TSE) is seen at the empty trading space in Tokyo, Japan October 1, 2020. REUTERS/Issei Kato 2/2

By Jessica DiNapoli

NEW YORK (Reuters) - Markets continued their upward march on Wednesday and yields climbed due partly to positive corporate earnings, despite apprehension about the Delta coronavirus variant and inflation, which spurred a flight to safety earlier in the week.

Wall Street extended gains after ending Tuesday sharply higher when it snapped a several-day losing streak. Yields on U.S. treasuries rose as markets regained a sense of calm.

Positive earnings from major companies, including Verizon Communications Inc (NYSE:VZ), Coca-Cola (NYSE:KO) Co United Airlines and Chipotle Mexican Grill (NYSE:CMG), helped fuel the gains.

“There’s a lot of nice follow-through from yesterday. On Monday there was a growth scare, and on Tuesday we recovered from that. Investors realized it was an over-reaction,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.

“Today is a continuation from yesterday showing that although global growth may be impacted in the short run, we ultimately are still on a recovery path, and it makes sense to stay long the market."

By mid-afternoon, the Dow Jones Industrial Average rose 259.9 points, or 0.75%, to 34,771.89, the S&P 500 gained 29.45 points, or 0.68%, to 4,352.51 and the Nasdaq Composite added 93.29 points, or 0.64%, to 14,592.17.

The yield on benchmark U.S. Treasuries rebounded for a second day on Wednesday, with 10-year Treasury notes up 7.9 basis points to 1.288%, after briefly crossing above 1.3%. Demand at an sale of 20-year government debt was tepid as investors preferred riskier assets.

"I think the big issue out there that we see from investors is where else can I go to make money except the stock market," said Gary Bradshaw, portfolio manager at Hodges Capital Management in Dallas.

"With a very accommodating Fed, saying they’re not going to raise rates out until 2022 or longer, the market should continue to do well," Bradshaw said.

Stocks could receive a further uplift later Wednesday if U.S. President Joe Biden's $1.2 trillion bipartisan infrastructure bill can navigate a planned procedural vote despite Republican appeals for delay. A vote was scheduled for mid afternoon.

A European Central Bank meeting on Thursday is expected to strike a dovish tone and provide a further boost.

The safe-haven dollar on Wednesday retreated from more than three-month highs, but inflation fears and concerns about the highly contagious coronavirus variant kept investors cautious.

Another safe haven, the Japanese yen, was also down against the dollar, as risk aversion eased.

The dollar index, a measure of its value against six major currencies was little changed to slightly lower at 92.911. On Tuesday, the index hit a more than three-month high.

As well as looking past rising COVID-19 cases, investors appeared to look past concerns that data last week showing a surge in U.S. consumer prices in June could prompt the Federal Reserve to bring a quicker end to emergency stimulus measures.

That earlier flight to safe-havens had pushed the U.S. 10-year yield down < US10YT=RR> more than 20 basis points in the space of a week.

Gold, likewise, lost some of its recent safe-haven appeal on Wednesday, with spot gold dropping 0.4% to $1,802.79 an ounce.

RISING INFECTIONS

MSCI's gauge of stocks across the globe gained 0.85%.

"While some of the world is shrugging off rising infections as vaccination rates limit the severity of any symptoms of new cases, there are few parts of the world that can totally ignore this," said Rob Carnell, Asia-Pacific chief economist at ING.

Oil prices rose as improved risk appetite provided support despite data showing an unexpected rise in U.S. crude inventories last week and a weaker demand outlook due to rising COVID-19 infections.

U.S. crude rose 4.75% to $70.39 per barrel and Brent was at $72.32, up 4.28% on the day.

Investors turn to stocks as they shrug off COVID worries
 

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Comments (34)
MK MK
MK MK Jul 21, 2021 4:41PM ET
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Do not call those silly sheeps investors
Max German
7Max7 Jul 21, 2021 4:04PM ET
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they repeat last year with glance denial phase now next crash and cause there is no money left without taxing people markets are broken jpm made 55B or smh and had to cut 30B loan reserves to have profits, if u havr a fed coming that every bank passed the stress test u know the next financial crisis could be the onr wiping big banks and bringing old age banks back
rene topeka
rene topeka Jul 21, 2021 4:03PM ET
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why change story so quick in a day? i learnt one thing if you don't have bigger balance and ready to lose, don't play the future. just buy real stock
James Vandervest
James Vandervest Jul 21, 2021 3:51PM ET
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So they were scared yesterday and today they were like, Nah?
NUNO LOUREIRO
NUNO LOUREIRO Jul 21, 2021 3:45PM ET
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This market narratives are better than a Monty Python sketch
Mitchel Pioneer
Mitchel Pioneer Jul 21, 2021 3:40PM ET
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Another show of pure fraud in the biggest investment farce in the world.
Miriam Morkhul
Miriam Morkhul Jul 21, 2021 2:53PM ET
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If the Omega variant shows up will investors panic sell for good?
gary ross
gary ross Jul 21, 2021 2:53PM ET
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If we get to an Omega variant we might not be around to see.
Francesco Lucchesi
Francesco Lucchesi Jul 21, 2021 2:49PM ET
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covid is over in other words lol. these journalists get paid for this ?
Sloppy Joe
Sloppy Joe Jul 21, 2021 2:40PM ET
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u mean fed? lol
Marian Claudiu Catalina
Marian Claudiu Catalina Jul 21, 2021 2:11PM ET
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some news are useless. if market goes down is covid/delta, today ppl afraid about this tomorrow aren't.
Max German
7Max7 Jul 21, 2021 1:50PM ET
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investors = banks
Stan Smith
Stan Smith Jul 21, 2021 1:45PM ET
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"Investors"??? You mean the FED and Central Banks.
AI Wu
AI Wu Jul 21, 2021 1:27PM ET
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Fear is transitory greed is permanent
Cali Cartel
Cali Cartel Jul 21, 2021 1:03PM ET
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Reuters at its finest
Sloppy Joe
Sloppy Joe Jul 21, 2021 1:03PM ET
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always enjoyed them as funny reading in last 25 years of trading career
Mitchel Pioneer
Mitchel Pioneer Jul 21, 2021 12:56PM ET
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Uninhibited tight-rope walk "rally" #2, as Monday's loss magically vanishes into thin air.  The legalized financial defiling of America continues.
Ronald Warren
Ronald Warren Jul 21, 2021 12:56PM ET
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One day, this Jenga will give way. It won't take much. Just like a complex lie, it will unravel itself!
YouTube Account
YouTube Account Jul 21, 2021 12:41PM ET
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2 days ago: covid fears topple market. yesterday: no mention of covid as market rises. Today: market rises despite covid fears. You people are horrible.
Sloppy Joe
Sloppy Joe Jul 21, 2021 12:34PM ET
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hehehehehe who writes these stories
Jo Pa
Jo Pa Jul 21, 2021 12:24PM ET
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Fatality rate of Black Plague, 40%. Fatality rate of hyped up common cold, 0.002%.
Jon Bal
Jon Bal Jul 21, 2021 12:24PM ET
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i read they also had a shortage of ventilators 670 years ago
zen cool
zen cool Jul 21, 2021 12:13PM ET
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appetite ........nice wording........
oeg vokar
oeg vokar Jul 21, 2021 12:12PM ET
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Reuters fake interpretation....again. It's amazing how powerful Reuters is ....facts and truth doesn't matter anymore.
nemo me impune lacessit
nemo me impune lacessit Jul 21, 2021 12:12PM ET
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rarely do they provide either.
Dhia Betar
Dhia Betar Jul 21, 2021 11:55AM ET
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Title should read ;- fed market plunge protection team is busy again for the second day buying stocks and helping to MAGA.
Jokers R Us
Jokers R Us Jul 21, 2021 11:52AM ET
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Crazy how much a virus with a close to 100% survival rate can have such an effect on the economy. Biggest crime ever committed against the people of earth.
Filipe Pereira
Filipe Pereira Jul 21, 2021 11:52AM ET
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well it made oil cheaper for a while during lockdowns
Stan Smith
Stan Smith Jul 21, 2021 11:52AM ET
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The Covid charade supports other monetary agendas
Forex Harbingers
Forex Harbingers Jul 21, 2021 11:48AM ET
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Reuters yesterday. "omg, market doom and gloom, banks rethink strategy with rout." Reuters today. "Risk appetite is back, things are good." lol
Khanh Phuong
Khanh Phuong Jul 21, 2021 11:44AM ET
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Good news!
CHADWICK RICHINGTON
CHADWICK RICHINGTON Jul 21, 2021 7:46AM ET
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Mortgage and housing market are collapsing. Millions of evictions and foreclosures begin next week… just look at lumber price
jake goldstein
jake goldstein Jul 21, 2021 7:46AM ET
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So true.
 
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