Wall Street rebounded off opening losses after Federal Reserve Chair Jerome Powell gave his second day of testimony to lawmakers and reaffirmed his view that the economy needs continued support — and more in Wednesday’s stock market recap.
Also helping bullish sentiment and second-half momentum was news FDA members determined that they believe Johnson & Johnson’s (NYSE: JNJ) COVID-19 vaccine candidate to be both safe and effective. If approved, it would be the third drug to combat the coronavirus.
The Russell 2000 soared 2.4% after tapping a high of 2,286.
The Dow rose 1.4%, following the late-day run to 32,009 and fresh all-time high.
The S&P 500 jumped 1.1% after trading to an intraday high of 3,928.
The Nasdaq rallied 1% with the midday peak reaching 13,607.
Energy and Industrials were the strongest sectors after jumping 3.5% and 1.5%, respectively. Utilities and consumer Staples were the only sector laggards with declines of 1.1% and 0.1%.
Owens & Minor Inc. Holding Co. (NYSE: OMI) zoomed 29% after a blowout quarter. The company reported a profit of $1.14 a share on revenue of $2.36 billion. Analysts had penciled in earnings of 85 cents a share on revenue of $2.16 billion. The gains pushed the stock to a fresh 52-week high.
Best Buy Co. Inc. (NYSE: BBY) will announce fourth-quarter earnings ahead of Thursday’s opening bell. The company is expected to report a profit of $3.42 a share on revenue of $17.15 billion. The high estimate is at $3.79 a share with the low forecast looking for a profit of $2.74. This would equate to a 37-cent beat or a 68-cent miss.
The company has topped forecasts over the past four quarters by 36, 63, 17 and 15 cents. There are 26 analysts that cover the stock with two Strong Buy ratings, six Buys, 16 Holds, and two Sell recommendations.
From the global stock market recap, European markets closed higher across the board.
The Belgium20 and Germany’s DAX 30 rose 0.8% while the U.K.’s FTSE 100 and the Stoxx 600 climbed 0.5%. France’s CAC 40 added 0.3%.
Asian markets settled lower following news that Hong Kong plans to increase the tax on stock trades for the first time in 28 years by a whopping 30%.
Hong Kong’s Hang Seng plummeted 3% and South Korea’s Kospi sank 2.5%. China’s Shanghai tumbled 2% and Japan’s Nikkei fell 1.6%. Australia’s S&P/ASX 200 declined 0.9%.
MBA Mortgage Applications plunged -11.4% last week following the -5.1% drop in the prior week. The purchase index fell -11.6% and refis were down -11.3%. The 30-year mortgage rate jumped to 3.08%, from 2.98% previously. The five-year ARM was steady at 2.83%. The report noted some of the slump was partly a function of the winter, and especially the storms that crippled Texas and severely impacted the south and northeast.
New Home Sales rose 4.3% to 923,000 in January following an upwardly revised 5.5% gain to 885,000 in December. The months’ supply dipped to 4 from 4.1 while homes for sale rose to 307,000 from 299,000. Sales were higher in three of the four regions, the midwest (12.6%), south (3%) and west (6.8%), with a decline in the northeast (-13.9%). The median sales price declined -1.9% to $346,400 after edging up 0.9% to $353,100 previously.
Fed Chair Powell repeated he does not expect an undesirable rise in inflation, but if there is, he assured that the Fed has the tools to deal with it. He expects a surge in inflation when the economy opens up and said there could be some impact too from supply chain constraints. He reiterated that does not mean there will be a higher inflationary process if the Fed retains its credibility and is able to anchor expectations. He also added asset prices are somewhat elevated, though he does not see any financial stability issues.
The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) fell for the fifth straight session after testing an intraday low of $139.16. New and upper support from last March at $139.50-$139 was breached but held. A close below the latter and the 52-week low at $139.01 would suggest a further pullback towards $138-$137.50.
Lowered resistance is at $141.50-$142 followed by $143-$143.50.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was down for the second straight session following the intraday fade to 21.35. Prior and upper support at 21.50-21 was recovered. A close below the latter would signal a retest towards 20-19.50.
Resistance is at 23.50-24 and the 50-day moving average.
The SPDR S&P 500 ETF (NYSE: SPY) was up for the second straight session after trading to an afternoon high of $392.23. Near-term and lower resistance at $392-$392.50 was cleared but held. A close above the latter would indicate upside towards $393.50-$394 with the current all-time peak at $394.17.
Support is at $387.50-$387 followed by $385.50-$385.
RSI is in an uptrend with lower resistance at 60-65 getting cleared and holding. A close above the latter would suggest additional strength towards 70 and the January peak. Support is at 55-50.
The Materials Select Sector SPDR Fund (NYSE: XLB) extended its winning streak to four sessions with the intraday high tapping $76.58. Near-term and lower resistance at $76.50-$77 was breached but held. A close above the latter would indicate a retest towards $77.50-$78 with the recent all-time high at $77.77.
Support is at $75-$74.50 followed by $73.50-$73 and the 50-day moving average.
RSI is in an uptrend with lower resistance at 65-70 getting breached but holding. A close above the latter would suggest further upside towards 75 and the January high. Key support is at 60.
Check back after the closing bell for the most important news and numbers in the WealthPress stock market recap.