US stocks rise as stimulus hopes remain, social media shines
NEW YORK (AP) — Stocks are pushing higher on Wall Street Wednesday as negotiations continue in Washington on more aid for the economy, though prospects remain cloudy that anything can happen soon.
The S&P 500 was up 0.6% after swinging between very small gains and losses in early trading. The Dow Jones Industrial Average was up 134 points, or 0.5%, at 28,443, as of 10:15 a.m. Eastern time, and the Nasdaq composite was 0.8% higher.
Stocks of social media companies were leading the way after Snap reported even bigger jumps in revenue and in the number of Snapchatters using its service each day than analysts expected.
Snap surged 29.7% following its quarterly profit report. In its wake, Twitter jumped 7.3% for one of the biggest gains in the S&P 500, and Facebook rose 5.2%.
Google’s parent company rose 3.5%, adding to its gains from a day before when the Justice Department sued it for antitrust violations. Investors had already been expecting such action, and analysts said Google’s counterarguments mean it will likely take years to reach a resolution.
On the losing end was Netflix, which fell 5.1% for one of the largest losses in the S&P 500 after it said growth in its subscriber rolls slumped by more during the summer than it had forecast. It also reported a weaker quarterly profit than analysts expected, following a surge earlier this year when people were yearning for things to watch amid coronavirus-caused lockdowns.
It’s a rare disappointing report in what’s so far been a much better earnings season than Wall Street girded for. Roughly one in six of the companies in the S&P 500 index has reported its results for the July-through-September quarter, and most have topped the low expectations analysts had set.
S&P 500 companies are on track to report a decline of a little less than 18% in earnings per share for the quarter from a year ago, which is not as bad as the 21% drop that analysts were forecasting at the end of the quarter, according to FactSet.
Much of Wall Street’s focus has been on Washington, though, where White House officials and Democrats are negotiating on another round of support to prop up the still-struggling economy.
The two sides have been making progress, House Speaker Nancy Pelosi told her Democratic colleagues in a letter late Tuesday. She said she hopes discussions will continue, past a self-imposed deadline of Tuesday.
Markets have been swinging recently with the perceived prospects of such stimulus. Investors have been clamoring for it since the summer, when extra benefits for laid-off workers and other support provided by the last round of aid approved by Congress expired.
But even if leaders from the White House and House of Representatives can reach a compromise soon, its fate looks unclear on Capitol Hill due to its growing price tag. Senate Majority Leader Mitch McConnell told fellow Republicans that he has warned the White House not to divide the party by sealing a relief deal before the election that could cost $2 trillion.
Regardless of the opposition, Jeffrey Halley of Oanda said, “the one lesson we can take is that the U.S. fiscal stimulus package remains the only thing financial markets are concentrating on, to the exclusion of everything else.”
The yield on the 10-year Treasury held steady at 0.81% after rising as high as 0.83% earlier Wednesday. It’s been generally climbing since dropping close to 0.60% early last month.
In London, the FTSE 100 index sank 1.4% after data showed government borrowing rose to the highest level on record in the first half of the financial year as tax revenue fell and authorities spent billions of pounds to prop up an economy ravaged by the coronavirus pandemic.
France’s CAC 40 fell 0.7%, and Germany’s DAX lost 0.5%.
In Asia, Japan’s Nikkei 225 gained 0.3%, South Korea’s Kospi added 0.5% and Hong Kong’s Hang Seng jumped 0.8%. Stocks in Shanghai slipped 0.1%.
AP Business Writer Yuri Kageyama contributed.