YORK (AP) — Technology companies and banks led a broad rally for U.S.
stocks in midday trading Tuesday following solid gains overseas as China
took more steps to soften the financial impact of the virus outbreak.
snapped up tech stocks, which are often sensitive to China’s economic
health because of ties to supply chains and sales. Apple rose 3.5% and
chipmaker Nvidia climbed 2.9%.
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 9.9%
and Clorox gained 4.7% on solid financial results. Google’s parent,
Alphabet, gave investors a disappointing revenue report and fell 3.4%.
SCORE: The S&P 500 index rose 1.7% as of 11:41 a.m. Eastern time.
The Dow Jones Industrial Average rose 486 points, or 1.7%, to 28,886.
The Nasdaq rose 2%. The Russell 2000 index of smaller company stocks
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.
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.
ERROR: Alphabet, the parent of internet search giant Google, fell 3.4%
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.
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 2.5% and Norwegian Cruise Line gained 1.7%.
AHEAD: Investors will get a clearer picture of the auto industry’s
health later Tuesday when Ford Motor reports its earnings. Entertainment
powerhouse Disney will also report earnings after the markets close,
its first quarterly report since launching a streaming video service to
General Motors and pharmaceutical giant Merck will release their financial results on Wednesday.
AP Business Writer Stan Choe contributed.