Tech companies lead US stock rally following global gains
NEW YORK (AP) — Technology companies and banks led a broad rally for U.S. stocks in early trading Tuesday following solid gains overseas as China took more steps to soften the financial impact of the virus outbreak.
Investors snapped up tech stocks, which are often sensitive to China’s economic health because of ties to supply chains and sales. Apple rose 2.3% and chipmaker Nividia climbed 1.9%.
Banks and health care stocks also made big gains. Citigroup rose 2.2% and UnitedHealth Group climbed 3%.
Utilities, real estate companies and other safe-play assets lagged the market as investors became more comfortable taking on risk. Prices for U.S. government bonds fell sharply and the price of gold also fell.
Wall Street is also assessing a busy round of corporate earnings. Ralph Lauren jumped 6.2% and Clorox gained 4.4% on solid financial results. Google’s parent, Alphabet, gave investors a disappointing revenue report and was among the few companies to slip in the early going.
KEEPING SCORE: The S&P 500 index rose 1.4% as of 10:20 a.m. Eastern time. The Dow Jones Industrial Average rose 432 points, or 1.5%, to 28,831. The Nasdaq rose 1.5%. The Russell 2000 index of smaller company stocks rose 1.5%.
Markets in Europe and Asia rose. The Shanghai Composite closed 1.3% higher and regained some ground but is still far from erasing an 8% plunge a day earlier.
BONDS: Bond prices fell, pushing yields sharply higher. The yield on the 10-year Treasury jumped to 1.60% from 1.52% late Monday. Perhaps more importantly, the 10-year yield also jumped above the three-month Treasury yield of 1.56%. The leapfrog move silenced a recession warning that had been ringing in the bond market, at least for now.
Yields for short-term Treasurys are rarely higher than for longer-term Treasurys, and when it does happen, a rule of thumb says a recession may be on the way in about a year or so. This recession warning signal, which has a fairly accurate but not perfect history, had begun flashing in recent days on worries about the virus for the first time since October.
CHINA MEASURES: China’s central bank is putting $57 billion in funds into its markets. The measure is on top of an advance announcement from Monday that the government would put $173 billion into the markets as they reopened from an extended break because of the virus.
The world’s second-largest economy is in a lockdown that is threatening economic growth there and globally. More companies, including Sony, are warning investors of a potential hit to revenue and profit because of the virus.
More than 20,000 cases have been confirmed globally, along with over 400 deaths. The cases have been mostly in China.
SEARCH ERROR: Alphabet, the parent of internet search giant Google, fell 4% after reporting weak revenue growth for its fourth quarter. The company’s revenue surged 18%, but still fell short of Wall Street's expectations. It is the second rocky quarter in a row, following a third quarter that brought a profit shortfall due to higher spending.
STEAMING AHEAD: Cruise ship operators steamed forward as Royal Caribbean climbed 2.2% after taking tougher measures to screen and restrict passengers amid the virus outbreak, including cancelling eight cruises in China. The cruise line also gave Wall Street a solid quarterly earnings report and profit forecast for the new fiscal year.
Carnival rose 2.4% and Norwegian Cruise Line gained 1.5%.
AP Business Writer Stan Choe contributed.