Stocks Surge, Recover Some Losses 10/16 15:56
U.S. stocks rocketed to their biggest gain in six months Tuesday following
strong earnings from major financial and health care companies as well as
encouraging reports on the economy.
NEW YORK (AP) -- U.S. stocks rocketed to their biggest gain in six months
Tuesday following strong earnings from major financial and health care
companies as well as encouraging reports on the economy. The Dow Jones
Industrial Average jumped 547 points.
Morgan Stanley, Goldman Sachs and UnitedHealth led a parade of companies
that reported profits for the third quarter that surpassed analysts'
expectations. Technology companies also jumped after taking steep losses during
the market's rout last week.
The S&P 500 index jumped 59.13 points, or 2.1 percent, its largest gain
since March 26, and finished at 2,809.92. Stocks have bounced around over the
last three days, and the S&P 500 is down 4.1 from its record high on Sept. 20.
The Dow gained 547.87 points, or 2.2 percent, to 25,798.42.
The Nasdaq composite climbed 214.75 points, or 2.9 percent, to 7,645.49 as
technology companies reversed some of their outsize losses from the last few
days. The Russell 2000 index of smaller-company stocks had its biggest rally in
almost two years as it surged 43.74 points, or 2.8 percent, to 1,596.84.
Even with the big gains, major indexes are still broadly lower for the month
following a two-day rout last week that erased nearly 1,400 points from the Dow.
Investors were encouraged by some good news on the economy. The Federal
Reserve said output by U.S. factories, mines and utilities climbed in September
despite the effects of Hurricane Florence, and the Labor Department said U.S.
employers posted the most jobs in two decades in August while hiring continued
Scott Wren, senior global equity strategist for the Wells Fargo Investment
Institute, said stocks jumped because the industrial production report suggests
inflation isn't speeding up, and that investors took that as a sign the Fed
won't accelerate the pace of its interest rate increases.
"Anything that helps the market think that the Fed won't make a mistake is
good," Wren said.
Netflix soared 12 percent to $387 in aftermarket trading after reporting
surprisingly strong subscriber growth during the summer. That was a welcome
change from the big losses it took after its second-quarter report, when it
posted disappointing subscriber totals and gave a weak forecast. Netflix is up
80.5 percent this year, the fourth-best of any S&P 500 stock.
UnitedHealth, the largest U.S. health insurer and provider of privately-run
Medicare Advantage plans, once again topped Wall Street forecasts and raised
its projections for the year. The stock climbed 4.7 percent to $272.57. That
suggests other health insurers are likely to report strong results in the next
few weeks. Cigna advanced 3.9 percent to $211.96.
Health care products giant Johnson & Johnson added 1.9 percent to $136.56
after it said prescription sales jumped.
Morgan Stanley rose 5.7 percent to $45.94 and Goldman Sachs added 3 percent
to $221.70 after the two investment banks did better than expected in the third
quarter, helped by strong performance in their trading operations and
better-than-expected revenue from stock underwriting. Morgan Stanley's stock
has fallen 12 percent this year and Goldman has lost 13 percent.
Technology companies rose. Microsoft jumped 3.2 percent to $110.65 and Adobe
rallied 9.5 percent to $260.67 after it backed its fourth-quarter profit and
revenue forecasts. The stock has jumped 49 percent this year, but had slumped
in recent days. Internet companies also advanced. Alphabet, Google's parent
company, rose 2.8 percent to $1,133.08.
On Wednesday Canada will legalize marijuana nationwide. While cannabis
companies mostly traded lower Tuesday, the stocks have made huge gains this
year in highly volatile trading. Tilray fell 4.4 percent to $158.38 while
Canopy Growth shed 6.8 percent to $53.01.
Benchmark Capital analyst Mike Hickey started coverage of Tilray with a $200
price target Tuesday, saying its supply deals with pharmacies and a partnership
with drugmaker Novartis will help make it an early leader in the market. Hickey
valued the Canadian cannabis market at about $3.2 billion in 2019 and said it
will climb to $8.1 billion by 2023.
Tilray's market value stands at almost $15 billion, up ninefold since it
went public in mid-July. Canopy Growth, which recently announced a big
investment from Corona beer maker Constellation Brands, has more than doubled
in value to $12.2 billion.
The huge gains reflect investors' view that that other countries will
legalize marijuana in the years to come.
U.S. benchmark crude oil added 0.2 percent to $71.92 per barrel in New York.
Brent crude, the international standard, rose 0.8 percent to $81.41 per barrel
Wholesale gasoline rose 1.7 percent to $1.98 a gallon and heating oil picked
up 0.6 percent to $2.34 a gallon. Natural gas lost 0.1 percent to $3.24 per
1,000 cubic feet.
Bond prices edged lower. The yield on the 10-year Treasury note rose to 3.17
percent from 3.16 percent.
Gold rose 0.1 percent to $1,231 an ounce. Silver lost 0.2 percent to $14.70
an ounce. Copper slipped 0.3 percent to $2.78 a pound.
The dollar rose to 112.18 yen from 111.88 yen. The euro fell to $1.1578 from
France's CAC 40 added 1.5 percent while the DAX in Germany jumped 1.4
percent. Britain's FTSE 100 rose 0.4 percent. Italy's FTSE MIB jumped 2.2
percent after the government avoided last-minute delays in presenting a budget
Japan's benchmark Nikkei 225 rallied 1.2 percent and the Kospi in South
Korea was little changed. Hong Kong's Hang Seng index finished 0.1 percent