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NEW YORK, Jul 21 (Reuters) – Wall Street posted its second straight rise on Wednesday as robust corporate earnings and renewed optimism about the US economic recovery fueled investor risk appetite.
All three major US stock indices added on gains from the previous session, placing all three within 1% of their all-time closing highs.
Economically sensitive small caps, semiconductors and financial stocks outperformed the broader market.
“It’s a swing between big wins and a recovering market and concerns about whether the economy will slow due to the (COVID-19) Delta variant,” said Peter Tuz, president of the Chase Investment Counsel in Charlottesville, Virginia. “But we see strong profits with a generally positive forecast and the feeling that (the delta variant) can be managed.”
A rebound in travel helped increase United Airlines revenue, which in turn helped increase the S&P 1500 Airlines and Hotels / Restaurant / Recreation indices.
“Earlier this week, these stocks suffered renewed fears that travel would slow and all related industries will suffer, but those fears are gone,” Tuz added. “Demand continues as expected, I don’t think Delta fear is making people change their plans.”
US Treasury benchmark yields continued to recover from a five-month low after a weak 20-year bond auction that benefited interest-rate banks.
“People are being comforted by 10-year bonds, which is a sign of recovery,” said Tuz. “Today there is an escape from safety.”
The controversy in Washington over a $ 1.2 trillion bipartisan infrastructure package progressed as Senate Democrats steered toward a proposed procedural vote despite Republican appeals for a delay.
Unofficially, the Dow Jones Industrial Average rose 285.75 points, or 0.83%, to 34,797.74, the S&P 500 rose 35.59 points, or 0.82%, to 4,358.65, and the Nasdaq Composite rose 133.08 points, or 0 , 92% to 14,631.95.
Of the 11 key sectors in the S&P 500, energy stocks were the big winners, aided by soaring crude oil prices.
The reporting season for the second quarter is in full swing, with 73 of the companies in the S&P 500 having published results. Of these, 88% exceeded consensus expectations.
Current estimates show aggregate earnings growth for the S&P 500 of 75% year-over-year for the April to June period, a significant increase from the 54% growth at the beginning of the quarter.
Among the winners, Chipotle Mexican Grill hit a record high after the burrito chain beat earnings estimates and forecast strong sales growth in the current quarter.
Coca-Cola rose after raising its forecast for the year.
Verizon Communications rose after its bottom line, which was driven by growing demand for its 5G services.
Drug maker Johnson & Johnson forecast $ 2.5 billion in sales for its one-off COVID vaccine this year and increased its sales estimates.
On the losing side, Netflix Inc reported slower subscriber growth late Tuesday, causing stocks to decline.
Harley-Davidson’s second-quarter earnings release showed that the turnaround plan appeared to be making headway, but the company lowered its forecast for operating income due to tariffs from Europe, its second largest market.
Reporting by Stephen Culp; Additional coverage from Devik Jain and Shreyashi Sanyal in Bengaluru; Editing by Cynthia Osterman