US stocks extend rally as companies report solid earnings
NEW YORK (AP) — Stocks are extending their rally on Wall Street Wednesday as investors assess the latest batch of solid corporate earnings reports and set aside fears about economic fallout from the virus outbreak that originated in China.
Major indexes are heading into a third straight day of gains and the S&P 500 index is within range of another record high.
Versace parent Capri Holdings jumped 10% and CoverGirl owner Coty jumped 12.7% for some of the strongest gains as Wall Street rewarded their results, which easily beat analysts' forecasts.
Health care companies made solid gains. Insurance giant UnitedHealth Group and drug developer Amgen were standouts.
Crude oil prices jumped 3.7% and lifted energy stocks. Exxon Mobil gained 3.6%.
Investors shifted away from safe-play holdings as they took on more risk. The yield on the 10-year Treasury rose to 1.64% from 1.60% late Tuesday. Utilities and real estate companies lagged the market.
KEEPING SCORE: The S&P 500 index rose 0.7% as of 11:45 a.m. Eastern time. The Dow Jones Industrial Average rose 281 points, or 1%, to 29,090. The Nasdaq rose 0.1%. The Russell 2000 index of smaller company stocks rose 1.1%.
Markets in Europe and Asia rose.
VIRUS UPDATE: The recent virus outbreak has infected more than 24,500 people globally, but has been mostly confined to China. The world's second largest company remains on lockdown and companies continue to warn of an expected impact to revenue and profit, though the extent of the damage for many remains unclear. Tesla plunged 13.2% on reports that the shutdowns in China will delay production at its Shanghai factory. The company warned investors last week that production delays in China were possible.
SHRINKING MEDICINE CABINET: Merck fell 3.9% after the drug maker reported weak fourth-quarter revenue and said it will spin off some of its operations, including the women’s health division. In all, the pharmaceutical giant is looking to shed businesses that churn out $6.5 billion in annual revenue as it focuses on growth areas including cancer treatments, vaccines and veterinary drugs.
BUSTED TIRES: Ford slumped 9.8% after the automaker reported weak fourth-quarter earnings to cap off a disappointing year. The company’s profit plunged in 2019 because of slowing sales, the cost of a botched SUV launch and some big pension expenses. It also gave investors a weak profit forecast for 2020.
SHRINKING DEPARTMENT: Macy’s rose 2.9% after the department store giant said it will cut 2,000 corporate jobs and close 125 of its least productive stores. The store closures represent about one fifth of Macy's current total. Macy's, like its peers Nordstrom and J.C. Penney, is dealing with stiffer competition and shoppers' changing behavior to online and discount shopping.