U.S. stocks rose Wednesday, extending the previous session’s rebound, as investors turned their focus to the banner start to corporate earnings season.
The S&P 500 climbed 0.6%, a day after the broad market gauge posted its biggest one-day gain since late March. The advance almost unwound the S&P 500’s steep drop from Monday and pushed the index to within 1.5% of its record closing high. The Dow Jones Industrial Average rose 260 points, or 0.8%, and the Nasdaq Composite added 0.4%.
Earnings season has helped buoy sentiment. Through Tuesday, 85% of S&P 500 companies that had filed quarterly results topped analysts’ expectations, according to FactSet.
Many money managers say they see few other places than stocks to deploy cash with yields on government and corporate bonds trading at depressed levels. Some remain concerned, though, that the Delta variant will take some steam out of the global economic rebound, and they expect a jittery stretch of trading heading into the peak summer vacation period.
“The outlook in an absolute sense is still pretty good: This is a rebound for a big recession,” said
senior markets economist at Capital Economics. “It is hard to justify big falls.”
Nonetheless, Mr. Goltermann added that “the past month [has] not been smooth sailing and it might take time to get back to something more calm.” He expects yields on government bonds to rise toward their March highs and for investors to shift money back into stocks that benefit from the reopening of the economy, albeit with less alacrity than at the start of the year.
climbed 8.3% after reporting sales that blew past pre-pandemic levels.
added 2.5% after saying earnings per share this year would trump the beverage giant’s previous forecast.
second-quarter revenue grew by 27%, but shares of the medical company slipped 0.1% in early trading.
fell 4.6% after the motorcycle-maker turned a profit in the second quarter.
are scheduled to post results after markets close.
The yield on 10-year Treasury notes rose to 1.271% from 1.208% Tuesday. Yields move in the opposite direction to bond prices and have skidded in recent weeks in a sign of waning concerns about a prolonged overshoot in inflation.
“Consumers are going to remain at least moderately cautious because of the spread of Delta everywhere,” said Christopher Jeffery, head of inflation and rates strategy at Legal & General Investment Management. “It is really hard to think the U.K. template isn’t at least going to be partly followed in the U.S. and Europe,” he added, referring to a spike in cases in the U.K.
Still, Mr. Jeffery is upbeat about the outlook for stocks. “It is hard for us to get structurally negative on equities” given the strong start to earnings season, he said.
In overseas markets, the Stoxx Europe 600 jumped 1.7%, buoyed by shares of travel, leisure and retail companies. Japan’s Nikkei 225 rose 0.6%, and the Shanghai Composite Index added 0.7%.
—Paul Vigna contributed to this article.
Write to Joe Wallace at Joe.Wallace@wsj.com
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