Tech stocks are gaining income, hope for incentives

Equity markets rebounded this week, shaking off concerns about higher valuations, a sharp rise in prices for a handful of stocks and silver, a weak economic backdrop and the threat of new coronavirus variants. Investors have instead focused on better-than-expected corporate results, a decline in new coronavirus cases, and betting that President Biden will incur more tax spending in the coming weeks.

“Over the past two days, the feeling has returned that we still have a background of monetary stimulus and the prospect of an additional stimulus package,” said Seema Shah, chief strategist at Principal Global Advisors. “The path ahead is not smooth, but we think it is an uphill path.”

Shares of Alphabet rose 6.6% after Google’s parent company said late Tuesday that it had posted record fourth-quarter sales.

Amazon.com AMZN -0.28%

decreased by 0.9%. The giant online retailer posted record quarterly sales late Tuesday, marking the first time its sales exceeded more than $ 100 billion in a three-month period. It also said Jeff Bezos would step down as CEO.

Spotify technology was down about 8% after offering a cautious picture of the year ahead early Wednesday.

More companies, including Qualcomm,

QCOM -1.13%

PayPal PYPL -0.35%

Holdings and Costco Wholesale will report profits after the markets close.

“Earnings have certainly been a lot stronger than anyone expected, and they’re led by the areas where we’ve seen a strong position so far: the technology sector, the stay-home sector,” said Matt Forester, chief investment officer of De Lockwood Advisers to BNY Mellon. “However, we still have a lot to see, especially in the sectors so badly affected by Covid.”

Investors are also following talks between lawmakers about a new round of measures to alleviate the coronavirus. President Biden’s administration has called for a package totaling $ 1.9 trillion, though a counter-offer from Republicans this week was less than half that. The Democrats are expected to make a decision in the coming days on whether or not to try to quickly introduce a larger stimulus law themselves.

“The main focus is on timing,” said Ms Shah. “There is a general opinion that the stimulus will be significant, the important question is, is it coming soon enough because the US economy needs it now?”

Some of the stocks that have skyrocketed in popularity among traders on online forums were choppy during early trading on Wednesday, having undergone sharp reversals in the previous session. AMC Entertainment Holdings was up 8.6%, after a 41% drop on Tuesday. GameStop climbed 13%, after dropping 60% on Tuesday. Finance Minister Janet Yellen has convened a meeting with key financial regulators to discuss recent financial market volatility related to GameStop, a finance spokeswoman confirmed Tuesday evening.

New economic data will provide clues about the health of the services sector. The Institute for Supply Management’s services index for January is expected to be at 10 a.m.ET and is expected to show continued expansion of activity in January.

In the commodity markets, Brent oil, the international benchmark for oil, rose 1.2% to $ 58.14 a barrel. The meter is close to the highest level since the pandemic hit global financial markets last spring.

Silver prices rose 2% to $ 26.9 per troy ounce.

In the bond market, the yield on the 10-year Treasury bill held back after the Treasury Department said it plans to maintain the volume of its nominal bond and bond sales this quarter. It had recently climbed to 1.117% from 1.105% Tuesday.

Abroad, the pan-continental Stoxx Europe 600 rose by 0.4%.

Italy’s FTSE MIB stock index outperformed other regional benchmarks after former European Central Bank President Mario Draghi was asked to form a new government. Yields on the country’s 10-year bonds fell to 0.581%, from 0.651% on Tuesday.

In Asia, Japan’s Nikkei 225 rose 1%. Hong Kong’s Hang Seng added 0.2%, while in Mainland China, the Shanghai Composite Index fell 0.5%.

Write to Will Horner at [email protected]