US Stocks Jump Nearly 1% to Snap 2-Day Losing Streak
US stock market erases some of the losses from earlier in the week. Futures keep their flat trend ahead of the opening on Thursday.
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- US stocks erase some of the losses from earlier in the week
- Futures remain flat ahead of the opening on Thursday
The US stock market closed higher on Wednesday, ending a two-day drop as investors piled into assets across the board, from the high-flying tech sector to small caps. During the two days preceding Wednesday’s gains, market participants had halted the recent rally that resulted in all-time highs for the Dow and the S&P500 on Friday. On Wednesday, however, in signs of optimism and brighter outlook, some of the cautions eased as Wall Street recouped nearly 1% of the losses accumulated early in the week.
The blue-chip Dow Jones Industrial Average index scored 316.01 points, or a gain of 0.93%, to finish the session yesterday at 34,137.31. The S&P500 advanced 38.48 points, or 0.93%, to 4,173.42. The tech-focused Nasdaq Composite climbed the most, 1.19%, or 163.95 points, to end the day at 13,950.22. On Thursday, US equity futures point to a roughly flat open.
Some market analysts and participants argue that the latest slide in equities was a healthy and needed move for the market to pause and prepare to move forward. Others, however, do not expect the downturn to be that short-lived and conclude in two days only. For investors to get a clearer picture of where the economy is headed, they continue to monitor earnings that will showcase if the current expensive stock valuations are justified.
Disappointing Results for Netflix
Netflix, one of the high-growth large-cap tech companies, disappointed with its quarterly report yesterday. The video streaming company said it added 4 million new paying customers from January to March. The figure fell short of the guidance which stood at 6 million. The company’s shares on Wednesday fell $40.67, or 7.4%, to close at $508.90.
In contrast, cyclical stocks, like airlines, cruise lines, and retailers, moved higher yesterday as investors rotated once more to real-economy sectors in hopes of a swift recovery once the economy reopens. Energy and financial stocks also performed well as they are a crucial part of the cyclical sector poised to gain from a reopening. One of the biggest winners yesterday was the Norwegian Cruise Line. The company, part of the S&P500, added $2.76, or 10.32%, to reach $29.51. The company is up more than 66% in the past six months. Carnival, another US cruise line, jumped 6.3% yesterday, or $1.61, to $27.33. Carnival is up 80% for the past six months as a result of investors rotating to travel stocks.
European markets also notched gains yesterday, erasing some of the losses made earlier in the week. The Stoxx Europe 600 ticked higher by 0.65% after the index dropped 1.9% on Tuesday, its biggest single-day slide since late December. The French CAC40 led the recovery, higher by 0.74%, followed by the Spanish IBEX35, up 0.71%. The German DAX and the UK’s FTSE100 gained 0.44% and 0.52%, respectively.
The global recovery remains largely uneven and uncertain as a new wave of Covid-19 infections is sweeping across several countries, including India and Japan, threatening the anticipated global economic rebound.