Market Snapshot: U.S. stocks end higher, snap 2-day losing streak as small-caps surge and investors look past COVID worries, Netflix earnings


U.S. stocks finished Wednesday higher, ending a two-day losing streak, as investors looked past concerns that rising COVID-19 infections around the world could slow economic growth.

What did major indexes do?
  • The Dow Jones Industrial Average DJIA added 316.01 points, or 0.9%, to end at 34,137.31, its second-highest close ever.
  • The S&P 500 SPX rose 38.48 points or 0.9%, ending at 4,173.42, also its second-highest finish on record.
  • The Nasdaq Composite COMP increased 163.95 points, or 1.2%, closing at 13,950.22, its largest percent gain since April 15.
  • The Russell 2000

    of small-caps surged 2.4%, finishing at 2,239.63.

Stocks fell Tuesday for a second day, with the Dow

shedding 256.33 points, or 0.8%. The S&P 500

dropped 0.7%, while the Nasdaq Composite

lost 0.9% and the small-cap Russell 2000

slumped 2%.

What drove the market?

U.S. stocks on Wednesday halted a two-session skid, with Dow and S&P just shy of records and small-cap stocks outperforming as the investors favor stocks that might benefit from economic recovery as businesses reopen as more of the population becomes fully vaccinated.

“It’s the reflation trade, again,” said Kent Engelke, chief economic strategist at Capitol Securities Management. “One day, it’s like we are going to hell in a handbasket. The next day, it’s like wow, things are looking good.”

Engelke attributed the whipsawing action partially to the rise in algorithmic trading and technology-driven trading, but also to jitters around potential further corporate earnings disappointments, following the Netflix Inc.

earnings miss late Tuesday. “You can’t have earnings disappointments in issues that are trading at such high valuations,” Engelke told MarketWatch. “There is no room for error.”

Pressure earlier this week on the S&P 500 index and Dow followed fresh records on Friday, with analysts largely tying two days of declines to concerns about a renewed rise in COVID-19 infections around the world, particularly in India and Japan.

India reported a record number of cases again on Wednesday, counting more than 200,000 for a seventh straight day. The country’s hospitals are reported to be filling rapidly, it is running out of ICU beds and running low on oxygen.  News reports said Japanese officials were considering ordering a state of emergency for Tokyo and Osaka due to surging COVID-19 cases. Ireland’s confirmed COVID-19 deaths have now surpassed those of China.

But Mark Haefele, chief investment officer at Global Wealth Management, UBS AG, still sees buying opportunities in stocks as volatility picks up, particularly since shipments of the Johnson & Johnson

COVID-19 vaccine are set to resume to Europe, after its one-shot dose was paused in the U.S.

“Periods of elevated volatility can present opportunities to generate yield, gradually build up long-term holdings, or gain exposure to markets using asymmetric payoff structures,” the Haefele’s team wrote in a Wednesday note.

Read: Stocks are at all-time highs and the U.S. economy is booming. So why is everyone so freaked out?

“I call this the great re-assessment,” said Don Calcagni, chief investment officer for Mercer Advisors. “A lot of things are forcing market participants to hit the pause button and re-assess, including a rise in COVID cases. We’re also seeing some questionable earnings despite the overall headlines.”

“Look at Netflix,” Calcagni said in an interview. “Look at the bitcoin mini-crash. Look at the airlines — their earnings were very disappointing. I think a reassessment is occurring and I think that’s healthy. Right now we’re at peak everything. It doesn’t mean we can’t go higher from here but it is going to be harder.”

See: Stock-market sentiment shifts after investor euphoria pushed U.S. equities to record highs

Corporate earnings season has hit full swing, but disappointing results from Netflix late Tuesday sent shares of the streaming giant down 7.4% by Wednesday afternoon.

With markets being priced close to perfection, “any kind of blemish” can weigh down stocks, Kristina Hooper, Invesco’s chief global market strategist, told MarketWatch Wednesday in a phone interview. But “we’re on the cusp of what I think is going to be a strong economic recovery in the U.S.,” Hooper said, which should continue to support stocks after a recent shift in investor sentiment.

Therese Poletti: There is a new normal for Netflix, and that is not necessarily a bad thing

Which companies were in focus?
How did other assets perform?
  • The yield on the 10-year Treasury note
     rose less than a basis point to 1.566%. Yields and bond prices move in opposite directions.
  • The ICE U.S. Dollar Index
     a measure of the currency against a basket of six major rivals, was down about 0.1%.
  • Oil futures


    slid on prospects of diminished global demand from COVID-19, with the U.S. benchmark down $1.32 cents, or 2.1%, to settle at $61.35 per barrel, the lowest in about a week.
  • Gold futures

     gained 0.8%, or $14.70, to settle at $1,793.10 an ounce, a 2-month high.
  • In Europe, the Stoxx 600

     closed up 0.7% and London’s FTSE 100

     rose 0.5%.
  • In Asia, Hong Kong’s Hang Seng Index
    closed 1.8% lower, while the Shanghai Composite SHCOMP was virtually unchanged and Japan’s Nikkei 225 NIK dropped 2%.

William Watts and Andrea Riquier contributed reporting

NewsWatch: Dogecoin army’s campaign to drive crypto to $1 was a bust—so why do bulls still feel vindicated?

Previous article

International Living: Want to retire abroad? Here’s everything you need to know about taxes

Next article

You may also like


Leave a reply

Your email address will not be published. Required fields are marked *

More in News