U.S. stocks closed higher on Thursday, with the technology heavyweights rallying ahead of major earnings reports and upbeat domestic economic data calming investor jitters about surging coronavirus cases.
The rebound came after a more than 3% slide a day earlier in Wall Street’s main indexes, underscoring heightened market volatility ahead of the presidential election next week and growing fears of another COVID-19 slowdown.
Stocks rallied as investors anticipated strong results from a line-up of the biggest names in the U.S. corporate universe – Apple Inc, Amazon.com Inc, Google parent Alphabet Inc and Facebook Inc – due after market close.
“The earnings season so far has resulted in significant positive earnings surprises,” said New York’s Inverness Counsel chief investment strategist Tim Ghriskey. “We think that’s helping to fuel today’s rally in anticipation of positive surprises from these companies.”
Tech companies have seen demand surge for their products and services from people stuck at home during the pandemic.
Better-than-expected earnings from Pinterest Inc, which forecast a rebound in ad spending, helped spur the rally. Shares of the image-sharing company soared more than 26.9%.
Amazon’s third-quarter revenue beat Wall Street estimates as the pandemic pushed more people to shop online for groceries and other essential items on its platform. Net sales rose to US$96.15 bil from US$69.98 bil a year earlier.
Alphabet reported revenue rose to US$46.17 bil from US$40.5 bil a year earlier as the company returned to sales growth in the third quarter as businesses initially hobbled by COVID-19 resumed advertising.
Alphabet rose 7.9% after the bell but Amazon shares fell.
Sentiment also got a boost from data showing the U.S. economy grew at a record pace in the third quarter after the government poured out more than US$3 tri of pandemic aid. A separate report showed weekly unemployment claims fell last week.
“It’s positive data, but it’s a little bit backward looking because you have COVID-19 cases on the rise again which doesn’t really send a strong signal about the fourth quarter,” said New York’s Citi Personal Wealth Management head of investment strategy Shawn Snyder.
The CBOE volatility index surged to a 15-week high this week due to lack of fiscal stimulus, while the White House coronavirus task force urged for aggressive measures to curb the pandemic.
Democratic challenger Joe Biden holds a comfortable lead over President Donald Trump in national polls, but the race in battleground states that will likely decide the election are tighter than the national surveys.
The Dow Jones Industrial Average closed up 139.16 points, or 0.52%, to 26,659.11. The S&P 500 gained 39.08 points, or 1.19%, to 3,310.11 and the Nasdaq Composite added 180.73 points, or 1.64%, to 11,185.59.
Volume on U.S. exchanges was 9.74 billion shares.
Coach owner Tapestry Inc climbed 4% as it beat quarterly profit estimates and forecast growth for the year as demand for luxury handbags and apparel rebounded in China from pandemic lows.
The S&P 500 posted five new 52-week highs and 10 new lows; the Nasdaq Composite recorded 26 new highs and 78 new lows. – Oct 30, 2020
