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US stocks brush off latest loss, return to record heights US stocks brush off latest loss, return to record heights
(32 minutes later)
NEW YORK — Stocks are closing higher on Wall Street, having shaken off their latest virus-induced loss. The gains Wednesday pushed the S&P 500 and the Nasdaq to record highs. Tech stocks helped lead the way. Apple recovered most of its loss from the prior day. Expectations are high that China will limit the damage through stimulus. The S&P 500 rose 15 points, or 0.5% to 3,386. The Dow Jones Industrial Average added 115 points, or 0.4%, to 29,348. The Nasdaq rose 84 points, or 0.9%, to 9,817. Bond prices fell. The yield on the 10-year Treasury rose to 1.57%. NEW YORK — U.S. stocks shook off their latest virus-induced loss and returned to record heights Wednesday, with several familiar faces doing the heaviest lifting.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below: Technology stocks helped lead the market higher, as they’ve been doing for years, and Apple rallied to recover most of its loss from the prior day. It dropped Tuesday after warning that revenue this quarter would fall short of forecasts due to the viral outbreak centered in China.
U.S. stocks shook off their latest virus-induced loss and returned to record heights Wednesday, with several familiar faces doing the heaviest lifting. Worries remain about how disruptive the virus will be for manufacturing, travel and other economic activity across the region, but markets around the world rose as the number of new virus cases in China fell Wednesday. Expectations are also high that China and other central banks around the world will limit the economic damage through injections of cash into markets, lower interest rates and other stimulus measures, said Shawn Cruz, manager of trader strategy at TD Ameritrade.
Apple rose 1.5% as technology stocks once again helped lead the market higher. The iPhone maker recouped most of its loss from the prior day, triggered by a warning that revenue would fall short of forecasts due to the viral outbreak centered in China. The S&P 500 rose 15.86 points, or 0.5%, to 3,386.15 and surpassed its record set last week. The Dow Jones Industrial Average gained 115.84, or 0.4%, to 29,348.03. The Nasdaq climbed 84.44, or 0.9%, to 9,817.18 and also set a record.
Worries remain about how disruptive the virus will be for manufacturing, travel and other economic activity across the region, but markets around the world rallied as the number of new virus cases in China fell Wednesday. Expectations are high that China will limit the economic damage through stimulus and other measures. Healthy reports on the U.S. economy also helped buoy markets, including stronger data on home construction than economists expected. “I think markets are a little too rosy now,” Cruz said. “There is this assumption that the actual impact won’t be much, and if there is one, central banks will be able to step in and keep us alive.”
Treasury yields rose after a report showed that inflation on the wholesale level was higher than expected in January, but not by enough to dash traders’ expectations that the Federal Reserve will keep interest rates low for a long time. Low rates have been a key reason for stocks’ powerful rally over the last year, even when corporate profits have been flat to weaker. The problem arises if the virus lasts longer and does more damage than markets seem to be anticipating. “It seems like everyone is on the same side of the trade that this is going to be fine, which raises the potential for everyone to run for the door at the same time if central bank injections of cash aren’t going to cure anybody,” Cruz said.
KEEPING SCORE: The S&P 500 was up 0.6%, as of 1:40 p.m. Eastern time. If it stays that high, it will surpass its record set last week. Raising the potential volatility even more in such a scenario, Cruz said the companies most at risk to slowdowns in China are also those that have grown to become some of the biggest components of the S&P 500. That gives their movements outsized effects on index funds.
The Dow Jones Industrial Average rose 143 points, or 0.5%, to 29,375, and the Nasdaq composite was up 0.9%. For now, at least, investors seem to be confident that China’s central bank, the Federal Reserve and other central banks can prop up the economy.
TECH TITANS: Tech stocks have been the market’s biggest stars for years because of their ability to deliver strong profit and revenue growth despite a slow-moving economy. Low rates have been a key underpinning for the strong U.S. stock market, which has rallied even though growth in corporate profits has been weak. The Fed released minutes Wednesday afternoon from its last policy meeting, where officials said they see the current level of monetary policy “as likely to remain appropriate for a time,” at least until data on the economy shows a change in momentum.
On Wednesday, they once again helped pace the market. Besides Apple’s gain, Nvidia jumped 5.6% and Advanced Micro Devices rose 3.8%. As a group, tech stocks in the S&P 500 climbed 1.1% for the second-largest gain among the 11 sectors that make up the index. Treasury yields rose Wednesday morning following a pair of stronger-than-expected reports on the U.S. economy. One showed stronger housing construction data than economists expected, while another showed inflation was higher than expected on the wholesale level in January.
Tech stocks in the S&P 500 have surged nearly 47.7% over the last 12 months, nearly double the rise for any of the index’s other sectors. But yields moderated as the day progressed. The yield on the 10-year Treasury rose to 1.56% from 1.55% late Tuesday, after earlier being as high as 1.58%. The two-year yield climbed to 1.41% from 1.39% after earlier touching 1.44%.
RE-ENERGIZED: A longtime laggard was also high up the leaderboard. Energy stocks in the S&P 500 jumped 1.2%. A generally still-slow global economy has put the spotlight on companies that are nevertheless able to produce strong revenue and profit growth, and that’s why tech stocks have been the market’s biggest stars for years.
They climbed with the price of crude oil, which rose more than 2%. Concho Resources leaped 7% after reporting a stronger quarterly profit than analysts expected. On Wednesday, they once again helped pace the market. Besides Apple’s 1.4% gain, Nvidia jumped 6.1% and Advanced Micro Devices rose 3.5%. As a group, tech stocks in the S&P 500 climbed 1.1% for the second-largest gain among the 11 sectors that make up the index.
The sector has been struggling as worries about demand have weighed on the price of oil. Energy stocks have lost nearly 16% over the last 12 months, the only sector in the S&P 500 to be down over that time. Tech stocks in the S&P 500 have surged 47.7% over the last 12 months, nearly double the rise for any of the index’s other sectors.
YIELDS: The yield on the 10-year Treasury rose to 1.56% from 1.55% late Tuesday, and the two-year yield climbed to 1.42% from 1.39%. A longtime laggard was also high up the day’s leaderboard. Energy stocks in the S&P 500 jumped 1.3%.
MARKETS ABROAD: European indexes rallied, and the French CAC 40 climbed 0.9%. Germany’s DAX returned 0.8%, and the FTSE 100 jumped 1%. They climbed with the price of crude oil, while Concho Resources leaped 7.6% for the biggest gain in the S&P 500 after reporting stronger quarterly results than analysts expected.
The sector has been struggling as worries about weaker demand have weighed on the price of oil. Energy stocks have lost 15.5% over the last 12 months, the only sector in the S&P 500 to be down over that time.
Benchmark crude oil rose $1.27 to settle at $53.29 a barrel. Brent crude oil, the international standard, rose $1.37 to $59.12a barrel.
European stock markets also rallied, and the French CAC 40 climbed 0.9%. Germany’s DAX returned 0.8%, and the FTSE 100 jumped 1%.
In Asia, Japan’s Nikkei 225 rose 0.9%, the Hang Seng in Hong Kong added 0.5% and South Korea’s Kospi inched up 0.1%. Stocks in Shanghai lost 0.3%.In Asia, Japan’s Nikkei 225 rose 0.9%, the Hang Seng in Hong Kong added 0.5% and South Korea’s Kospi inched up 0.1%. Stocks in Shanghai lost 0.3%.
COMMODITIES: Benchmark U.S. crude jumped $1.30, or 2.5%, to $53.59 per barrel. Brent crude, the international standard, rose $1.47 to $59.22 per barrel. Wholesale gasoline rose 5 cents to $1.66 per gallon. Heating oil climbed 4 cents to $1.71 per gallon. Natural gas fell 2 cents to $1.96 per 1,000 cubic feet.
Gold rose $8.10, or 0.5%, to $1,611.80 per ounce. Silver gained 17 cents, or 0.9%, to $18.32 per ounce. Gold rose $7.50 to $1,607.50 per ounce, silver rose 16 cents to $18.29 per ounce and copper was unchanged at $2.61 per pound.
FRESHENING THE PILLOWS: Bed Bath & Beyond rose8.3% after the home goods retailer rolled out initiatives to turn the struggling chain around. The company will spend $1 billion this year reinvesting in stores, upgrading technology, and on debt reduction and share buybacks. The moves come a month after the company withdrew its annual financial forecast because of weak results. The dollar rose to 111.58 Japanese yen from 109.88 yen on Tuesday. The euro strengthened to $1.0796 from $1.0794.
MISSING INGREDIENTS: Struggling meal kits company Blue Apron plunged20.8% after saying it is considering a sale. The pioneer of the meal-kit craze has seen its value dwindle from nearly $2 billion to $58 million since it became a public company in 2017. It has faced increasingly tougher competition from online rivals and grocers, including Kroger and Walmart.
SOLID CONSTRUCTION: Several homebuilders gained ground following a surprisingly good government report on home construction. The report also showed that applications for building permits jumped 9.2% in January. Beazer Homes rose5.4% and Hovnanian Enterprises rose5%.
VIRUS UPDATE: The virus has now infected more than 75,000 people globally, though the overwhelming majority of them are in China. Scientific instrument maker Agilent, which gets about 19% of its revenue from there, is the latest company to warn that the virus’ economic impact will hurt profits.
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AP Business Writer Damian J. Troise contributed.AP Business Writer Damian J. Troise contributed.
Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.