Wall Street’s momentum swings back as stocks, yields tick up

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FILE – In this Nov. 23, 2020 file photo, a street sign is displayed at the New York Stock Exchange in New York. Stocks are off to a mostly higher start on Wall Street, keeping several indexes near record highs, but weakness in some Big Tech shares kept the gains in check (AP Photo/Seth Wenig, File)

Stocks closed higher on Wall Street, recovering some of last week’s losses and pulling closer to their record highs. The S&P 500 rose 0.8% Tuesday and got back within 1% of its record set earlier this month. Markets have been rising on enthusiasm about a coming economic recovery as COVID-19 vaccines roll out and amid expectations that Washington will soon try to deliver another round of economic stimulus. President-elect Joe Biden’s nominee for Treasury Secretary, former Fed Chair Janet Yellen, called on Congress to do more for the economy in testimony before the Senate.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

Stocks are ticking higher on Wall Street Tuesday, recovering some of last week’s losses to pull closer to their record highs.

The S&P 500 was up 0.9% in afternoon trading and back within 1% of its record set earlier this month. The Dow Jones Industrial Average was up 154 points, or 0.5%, at 30,968, as of 2:11 p.m. Eastern time, and the Nasdaq composite was 1.5% higher.

Wall Street’s rally is getting back on track after stocks ran out of steam last week. Markets have been rising on enthusiasm about a coming economic recovery as COVID-19 vaccines roll out and Washington gets set to try for another massive round of stimulus for the economy.

Janet Yellen, President-elect Joe Biden’s nominee to be Treasury Secretary, is calling on Congress to do more to boost the economy. In testimony prepared for her confirmation hearing on Tuesday, she said that with interest rates near their record lows, “the smartest thing we can do is act big” to avoid an even worse downturn in the near term and scarring for the economy in the long term.

Biden last week released details of a $1.9 trillion plan to bolster the economy, which would include $1,400 cash payments for most Americans. Democrats are also pushing for an accelerated rollout of COVID-19 vaccines, a higher minimum wage for workers and enhanced benefits for laid-off workers. The hope is that such stimulus can carry the economy until later this year, when more widespread vaccinations get life returning to some semblance of normal.

“If most of this is implemented, it does suggest significant pickup in economic growth as we head through to the fourth quarter of this year,” said David Kelly, chief global strategist at JPMorgan Funds.

The case for such stimulus has been rising by the day. Dismal reports have piled up showing how the worsening pandemic has more workers applying for jobless benefits and shoppers feeling less confident.

Tuesday’s Senate Finance Committee hearing with Yellen is one of several that the Senate will be holding as the incoming Biden administration tries to get its top Cabinet officials in office quickly. Biden is set to take the oath of office on Wednesday, ending President Donald Trump’s four-year term.

Besides stocks, the optimism about an eventual acceleration for the economy and another round of stimulus have also helped push Treasury yields up sharply recently.

The yield on the 10-year Treasury climbed to 1.09% from 1.08% late Friday. Higher rates could eventually add pressure on stocks, underscoring more how expensive stocks have become relative to the profits that companies are producing.

But some areas of the stock market could benefit, including banks. Higher rates and a healthier economy would allow them to earn bigger profits from making loans.

Bank of America was up 0.1% after flipping between small losses and gains after reporting a weaker profit for the last three months of 2020 than a year earlier, but still above analysts’ expectations. The bank also said expectations for a healing economy mean it doesn’t need to hold onto as much in reserves to cover for potentially bad loans.

Goldman Sachs, State Street and Halliburton also reported stronger results for the end of 2020 than analysts expected as earnings reporting season picks up pace. Wall Street is expecting a relatively weak showing across the S&P 500 this time around, with another sharp drop in earnings per share. But analysts expect growth to rebound powerfully through 2021.

General Motors jumped 9.4% for one of the biggest gains in the S&P 500 after saying its self-driving car company, Cruise, will work with Microsoft to develop autonomous, all-electric vehicles. GM, Microsoft, Honda and other investors will also pump $2 billion into Cruise, valuing it at $30 billion. GM bought Cruise in 2016. Microsoft shares rose 1.6%.

Western Union rose 1.9% after it said it will begin offering money transfer and other services at more than 4,700 Walmart stores, beginning in the spring. Walmart slipped 0.9%.

On the losing end was NOV, which fell 5.9% after saying it expects to report weaker revenue and results for the end of 2020 than it had earlier forecast. The energy company said the resurgence of COVID-19 infections pushed customers to slow their orders.

In Europe, Germany’s DAX lost 0.2%, and France’s CAC 40 slipped 0.3%. The FTSE 100 in London fell 0.1%.

In Asian markets, Hong Kong’s Hang Seng gained rose 2.7%, the Nikkei 225 in Tokyo gained 1.4% and South Korea’s Kospi jumped 2.6%. Stocks in Shanghai slipped 0.8%.

On Monday, trading got off to a slow start for the week around the world with U.S. markets closed in observance of Martin Luther King Day.

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