US stocks rose on Wednesday as major banks and blue-chip companies started another round of earnings.
The Dow Jones Industrial Average added 39 points or 0.1% shortly after the opening bell. The S&P 500 climbed 0.1% and the Nasdaq Composite also climbed 0.1%.
Shares of PNC Financial Services Group rose 1% as profit rose and the amount set to cover potential debt losses fell significantly from the previous quarter.
JPMorgan Chase and Citigroup posted better-than-expected results on Tuesday, while also warning that the economy is not yet out of the woods and that there could be significant defaults on loans by customers in the future.
“Earnings expectations are still fairly conservative, but they are starting to pick up,” said Willem Sales, global chief market strategist at HSBC Private Banking. “Anything that has to do with a hiring plan or redundancy plan is going to be extremely important,” he said.
He said that hiring by businesses would signal a strong rebound and the beginning of consumer spending, which is an important driver of the economy.
US hospitals are at their highest level since August 29, according to data from the Covid Tracking Project. Investors are worried that a continuing upsurge will result in pressure on businesses and economic reforms, new local restrictions.
Markets are also broadly reflecting an expectation that lawmakers will pass a new stimulus package after the election, which will help drive economic recovery by reducing consumer spending, and support corporate income and US stocks. But some investors expect small coronovirus-relief packages — such as assistance for small businesses or airlines — may be approved even before 3 November.
“Congress is going to throw trillions into the economy, and growth will be strong in 2021 and 2022,” said Patrick Spencer, managing director of US investment firm Baird. “At the end of the day, economic numbers are softening, so the excitement is coming. When it is coming, just worry about it. ”
Investors are monitoring progress on developing the coronovirus vaccine. Drugmaker Eli Lilly said on Tuesday that it was stopping a study of its Kovid-19 treatment because of potential safety concerns. Johnson and johnson,
Meanwhile, it hopes to know within those days whether it can resume testing its Kovid-19 vaccine, which was halted after a study volunteer fell ill.
“Our belief will eventually get to us, whether it is a vaccine or many drugs, that help treat you to the extent that the consumer gathers trust,” Mr. Sales said. “One of the things that makes us believe that they have a number to work in parallel.”
In bond markets, the yield on the 10-year Treasury note fell to 0.726% on Tuesday, down from 0.726%.
Overseas, the pan-continental Stokes Europe 600 fell by less than 0.1%.
In Asia, the major benchmarks were mixed until the end of trading. The Shanghai Composite Index closed down 0.6%. Japan’s Nikkei 225 climbed 0.1%.
Write Caitlin Ostroff at [email protected]
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