Stocks give up part of an early gain but still end higher
(AP) — Stocks overcame a late-afternoon burst of selling and closed higher Tuesday, as gains in big technology companies outweighed losses in banks and elsewhere in the market.
The S&P 500 rose 0.5% after being up 1.1% earlier. It’s the second straight sizable gains for the benchmark index following its worst week since June.
High-flying technology
stocks, which have been driving the market higher throughout the
pandemic, abruptly lost altitude earlier this month amid worries that
their prices had simply climbed too high, even after taking into account
their tremendous growth.
But the past two days has marked a
reversal of that trend, with shares in technology companies and others
that play a key role in online access and commerce climbing again.
Microsoft rose 1.6% Tuesday, while Amazon gained 1.7% and Zoom Video
climbed 1.8%.
A key reason tech stocks are climbing again is that
investors’ expectations that the companies’ profits will boom as even
more of daily life shifts online haven’t changed.
“The things
that are doing well or are beneficiaries or are working in this
environment, for good reason, are the things that are going up,” said
Tom Martin, senior portfolio manager with Globalt Investments. “That
isn’t going to change until we get a notable change in one of the things
that are uncertain: The virus itself and the effect that’s having on
the economy, and whether we get anything new on the fiscal stimulus
front.”
The S&P 500 rose 17.66 points to 3,401.20. The Dow
Jones Industrial Average inched up 2.27 points, or less than 0.1%, to
27,995.60. The index swung between a gain of 237 points and loss of 61.
The Nasdaq, which is heavily weighted with tech stocks, climbed 133.67
points, or 1.2%, to 11,190.32.
Stocks of smaller companies eked
out a tiny gain. The Russell 2000 index of small-caps picked up 1.18
points, or 0.1%, to 1,538.15.
Because tech companies have grown
so massive, their movements alone can dictate the market’s performance
more than ever. Tech stocks as a group account for nearly 28% of the
S&P 500, and they’re up 3.1% this week after slumping more than 4%
in each of the prior two weeks.
Analysts expect more volatility
for stocks in the months ahead as the market navigates uncertainty over
the outcome of the election, pessimism that Democrats and Republicans in
Washington will be able to reach a deal to send more aid to unemployed
workers and an economy still struggling amid the pandemic.
Investors weighed a batch of mixed global economic data Tuesday.
Stocks
in Europe and much of Asia ticked higher following reports showing
retail sales in China were higher last month than a year earlier for the
first such growth this year, after the pandemic pancaked the world’s
second-largest economy. In Europe’s largest economy, a reading on German
economic confidence rose more than expected.
In the United States, a report showed that industrial production
also strengthened last month. But the growth wasn’t as strong as
economists were expecting. Other reports showed that manufacturing in
New York State is expanding more than economists expected, as are import
and export prices.
Treasury yields were relatively steady. The
yield on the 10-year Treasury was at 0.67%, unchanged from late Monday.
The 30-year yield ticked up to 1.44% from 1.41%.
Shorter-term
rates remain pinned at lower levels on expectations that the Federal
Reserve will keep its benchmark rate at nearly zero for some time to
help the economy recover. The central bank is beginning its latest meeting
on interest-rate policy Tuesday, and it will announce its decision on
Wednesday. Economists say it could change some of the language around
its existing pledge to buy bonds to support markets, but they expect no
major news.
On the losing side was Carnival, which dropped 10.8%,
making it the biggest decliner in the S&P 500. The cruise ship
operator said it may sell up to $1 billion in stock to raise cash, and
it reported a preliminary $2.9 billion loss for its latest quarter. More
encouragingly, it also said its advance bookings for the second half of
2021 are similar to where booking positions were in 2018 for the second
half of 2019, before the coronavirus pummeled the industry.
Financial
stocks were also laggards. JPMorgan Chase fell 3.1%, losing an earlier
modest gain. It trimmed its forecast for this year’s net interest
income, which measures how much profit it makes from interest payments
for loans and other products after subtracting the interest it pays out
on deposits.
In European stock markets, Germany’s DAX returned
0.2%, and the French CAC 40 rose 0.3%. The FTSE 100 in London climbed
1.3%. Markets in Asia ended mostly higher.