Friday, February 23, 2024

Wall Street ticks up again, even Big Tech stocks this time

by Associated Press

NEW YORK (AP) — Stocks are ticking higher Wednesday, and this time big technology stocks are rising too on Wall Street.

The S&P 500 was up 0.6% in early trading. The Dow Jones Industrial Average was 42 points higher, or 0.1% , at 29,463, as of 9:43 a.m. Eastern time, and the Nasdaq composite was gaining 1.4%.

Enthusiasm about the economy’s possible return to normal has vaulted stocks higher this week following encouraging, but incomplete data on a potential vaccine for COVID-19. That’s pushed investors to shift dollars out of the old winners of the stay-at-home, virus-wracked economy and into beaten-down stocks that have a brighter future if people feel comfortable again going outside their homes.

Big Tech stocks had borne the brunt of this week’s dramatic reordering, but they clawed back some of those earlier losses. Microsoft rose 2%, cutting Its loss for the week to 3.8%, for example. Amazon gained 1.9% to cut its weekly loss to 6.6%.

Trading otherwise was mixed, though, with slightly more stocks falling in the S&P 500 than rising. Some prospective new winners of a post-vaccine economy were continuing to climb.

Lyft rose 6.1% after its results for the latest quarter showed signs of a recovery in its ride-hailing business. Revenue plunged by nearly half in the summer from a year earlier, but it was nowhere near as bad as during the spring, when lockdowns were at full force.

While several significant risks remain for Wall Street broadly, the optimistic case that investors are increasingly embracing is that one or more coronavirus vaccines could help corral the virus by the second half of next year, encouraging people to once return to life as it was before the pandemic.

All that economic activity would come on top of the tremendous aid that the Federal Reserve and other central banks around the world are pumping into the economy through very low interest rates and massive purchases of bonds. Hope also remains that the U.S. government may eventually deliver some form of support for the economy, though its total size would likely be smaller than if Democrats had swept this month’s elections.

Strategists along Wall Street are raising their forecasts for stock prices on expectations that political control of Washington will remain split between the parties. Republicans look set to keep the Senate, as long as runoff elections go their way in Georgia in January, while Democrats will hold the House of Representatives.

Democrat Joe Biden has clinched enough electoral votes to win the White House, meanwhile, clearing some of the uncertainty that weighed on the market through the vicious campaign. Even though President Donald Trump has refused to concede, investors are ignoring his complaints so far. They’re instead working on the assumption that a split Washington under Biden could keep tax rates low while offering more steady and predictable policies.

Those expected results helped push strategists at Goldman Sachs to raise their forecast for where the S&P 500 will end the year to 3,700 from 3,600. That would imply another 4.4% climb from Tuesday’s closing level. They expect it to rally another 16% rally through 2021. But the biggest driver for that is the hope for a return to normal life, rather than what happens in Washington.

“A vaccine is a more important development for the economy and markets than the prospective policies of a Biden presidency,” the Goldman Sachs strategists, led by David Kostin, said in a report.

Of course, several pessimistic cases also still hang over the market. One or more could ultimately derail what’s been a 9.1% rally for the S&P 500 already in November.

Chief among them is the continuing climb in coronavirus counts. Medical experts warn a difficult winter is approaching, and several European governments have already brought back restrictions on businesses to slow the spread of the virus there.

In the United States, Texas has become the first state with more than 1 million confirmed coronavirus cases, though the true count is likely higher than that. Even if the strictest lockdown measures don’t return to the United States, the worry is that scared customers will stay away from businesses regardless and undercut profits.

And even though early indicators have been encouraging about a potential coronavirus vaccine, there’s no guarantee whether one will ultimately be available or when.

Trading in the U.S. bond market is closed for Veterans’ Day, after Treasury yields climbed this week on hopes for a healthier economy and expectations that could lead to a pickup in inflation. The yield on the 10-year Treasury is close to its highest level since March.

The market’s expectations for inflation over the next few decades, meanwhile, reached its highest level since May 2019. That’s demonstrated through the difference in yields for 30-year Treasurys and 30-year Treasury Inflation-Protected Securities, according to Tradeweb.

In European stock markets, France’s CAC 40 rose 0.4%, and Germany’s DAX returned 0.3%. The FTSE 100 in London gained 1%.

In Asia, Japan’s Nikkei 225 rose 1.8%, and South Korea’s Kospi strengthened by 1.3%. But stocks slipped modestly in Shanghai and Hong Kong after Chinese regulations focused on technology companies pulled shares in big technology companies like Alibaba and Tencent sharply lower.

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