NEW YORK (AP) — U.S. stocks are rising again Wednesday, climbing toward records on stronger-than-expected earnings reports and continued optimism that new leadership in Washington will help usher in an economic recovery.
The S&P 500 was 0.7% higher at 3,827.31 in early trading, brushing above its record of 3,824.68 set earlier this month. The Dow Jones Industrial Average was up 113 points, or 0.4%, at 31,044, as of 10 a.m. Eastern time, and the Nasdaq composite was 1.3% higher.
Joe Biden will take the oath of office to become U.S. president later in the day, and he has a flurry of executive actions at the ready. He has also pitched a plan to pump $1.9 trillion more into the struggling economy, hoping to act quickly as his Democratic party takes control of the White House and both houses of Congress.
The hope on Wall Street is that such stimulus will help carry the economy until later this year, when more widespread COVID-19 vaccinations get daily life closer to normal. Such hopes have helped stocks and Treasury yields rise, with gains accelerating after Biden’s election, even as the worsening pandemic digs a deeper hole for the economy with more workers unemployed and shoppers less confident.
Janet Yellen, Biden’s nominee to be Treasury secretary, told the Senate Finance Committee during her confirmation hearing on Tuesday that the incoming administration would focus on winning quick passage of its $1.9 trillion plan.
“More must be done,” Yellen said. “Without further action, we risk a longer, more painful recession now — and long-term scarring of the economy later.”
A better-than-expected start to earnings reporting season is also helping to lift the market. Analysts came in with low expectations, forecasting the big companies in the S&P 500 will report a fourth straight drop in earnings per share because of the damage from the pandemic. But the vast majority of the earliest reports have managed to top forecasts.
Morgan Stanley rose 0.9% after reporting much stronger earnings than Wall Street had forecast. A boom in young companies selling their stock for the first time helped Morgan Stanley get more business, and it booked more revenue from stronger trading activity.
Netflix jumped 13.5% for one of the market’s biggest gains after it said it ended last year with more than 200 million subscribers for the first time. It also said it made more in revenue during the last three months of 2020 than analysts expected, though its earnings fell short of forecasts. Business is good enough for the company that it says it likely doesn’t need to borrow anymore to cover its day-to-day operations.
The yield on the 10-year Treasury rose to 1.10% from 1.07% late Tuesday.
In European stock markets, the German DAX returned 0.7%, and the French CAC 40 rose 0.5%. The FTSE 100 added 0.1% in London.
In Asia, Japan’s Nikkei 225 slipped 0.4%. Main urban areas in Japan, including Tokyo, are under a state of emergency, with evening dining at restaurants discouraged. Critics say that’s not enough, as deaths related to COVID-19 have been rising. A vaccine rollout has not begun in Japan.
Other Asian markets were stronger. South Korea’s Kospi rose 0.7%, Hong Kong’s Hang Seng gained 1.1% and stocks in Shanghai rose 0.5%.