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Investors turn to stocks as they shrug off COVID worries

Published 07/20/2021, 10:21 PM
Updated 07/21/2021, 02:51 PM
© 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

© 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

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.

© Reuters. FILE PHOTO: People are seen on Wall Street outside the New York Stock Exchange (NYSE) in New York City, U.S., March 19, 2021.  REUTERS/Brendan McDermid/File Photo

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.

Latest comments

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
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
So they were scared yesterday and today they were like, Nah?
Another show of pure fraud in the biggest investment farce in the world.
If the Omega variant shows up will investors panic sell for good?
If we get to an Omega variant we might not be around to see.
covid is over in other words lol. these journalists get paid for this ?
u mean fed? lol
some news are useless. if market goes down is covid/delta, today ppl afraid about this tomorrow aren't.
investors = banks
&quot;Investors&quot;??? You mean the FED and Central Banks.
Fear is transitory greed is permanent
Uninhibited tight-rope walk &quot;rally&quot; #2, as Monday's loss magically vanishes into thin air.  The legalized financial defiling of America continues.
One day, this Jenga will give way. It won't take much. Just like a complex lie, it will unravel itself!
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.
hehehehehe who writes these stories 😂😂
Reuters fake interpretation....again. It's amazing how powerful Reuters is ....facts and truth doesn't matter anymore.
rarely do they provide either.
Title should read ;- fed market plunge protection team is busy again for the second day buying stocks and helping to MAGA.
Reuters yesterday. &quot;omg, market doom and gloom, banks rethink strategy with rout.&quot; Reuters today. &quot;Risk appetite is back, things are good.&quot; lol
Good news!
Mortgage and housing market are collapsing. Millions of evictions and foreclosures begin next week… just look at lumber price
So true.
There are no free markets anymore. Ppt and the feds proxy banks move the markets up and down with all of the printed fiat. Gold , silver, platinum real estate, manufacturing plants, guns, ammunition. Those are the assets you need to buy with your profits. Just remember to take profits and buy those assets
It is really a shame. I agree 100%!
Plant soil, seeds and a book on gardening. Maybe chicken. But absolutely guns and ammo first. The rioting people in the cities might find their way to rural farms.
Racist article
I thought we weren't allowed to blame the Asians for anything.  Why are they using the word Asian in the title?  Isn't that where the covid virus started?  Trump was right and called it like it is.  Nobody likes to hear the truth anymore.  Everyone is too worried about stepping in a warm patty in the tall grass.
Dude you have to use geographical locations. I really don't know what your deal is. The word Asian is not racist, African is not racist and European and American isn't racist either. If Asian shares go down compared to European ones you have to highlight it.
Wholeheartedly agree with Jacob above. For Covid-19, we also must use the term &quot;Wuhan China Virus.&quot;
And if I say &quot;African shares are all the time lower than European shares a lot&quot;..is this racist?
What's the best way to get lint out of one's navel?
Screwdriver
LOL Good one.
Security measures at the airport will involve old fashioned methods of checking a person's true temperature.  Only one thermometer will be used.  Don't worry, it is self cleaning.
Sticking it in a jar of mayonnaise would be less sloppy and tighter than these half baked log line click bait titles.  Click bait can get you 20 years.
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