Gain from technology stocks over earnings, hopes of stimulus

The stock markets rebounded this week, removing concerns about strained valuations, a sharp rise in prices for a handful of stocks and silver, a weak economic scenario and the threat of new variants of the coronavirus. Instead, investors focused on better-than-expected corporate results, a reduction in new coronavirus cases and bets that President Biden will generate more tax spending in the coming weeks.

“The past two days have seen a return to the feeling that we still have monetary stimuli in the background and the prospect of an additional stimulus package to come,” said Seema Shah, chief strategist at Principal Global Advisors. “The road ahead is not an easy one, but we think it is an upward one.”

Alphabet’s shares rose 6.6% after Google’s parent company said on Tuesday that it recorded record revenue in the fourth quarter.

Amazon.com AMZN -0.46%

decreased 0.9%. The online retail giant released a quarterly sales record on Tuesday, marking the first time its revenue exceeded $ 100 billion in a three-month period. He also said that Jeff Bezos would step down as CEO.

Spotify Technology fell about 8% after offering a cautious view of the year starting on Wednesday.

More companies, including Qualcomm,

QCOM -1.48%

PayPal PYPL -0.24%

Holdings and Costco Wholesale are expected to report profits after the markets close.

“The gains were definitely a little stronger than anyone expected, and they are led by the areas in which we have seen strength so far: the technology sector, the sector that stays at home,” said Matt Forester, director of investments at Conselheiros by Lockwood from BNY Mellon. “We still have a lot to do, however, especially in the sectors that have been heavily impacted by Covid.”

Investors are also monitoring negotiations between lawmakers over another round of coronavirus relief measures. President Biden’s administration asked for a package totaling $ 1.9 trillion, although a counter offer from Republicans this week was less than half that. Democrats are expected to make a decision in the next few days on whether to start trying to quickly approve on their own a major stimulus bill.

“The biggest focus is at the right time,” said Ms. Shah. “There is an overview that the stimulus will be considerable, the important question is: it will come soon because the US economy needs it now.”

Some stocks that grew in popularity among traders on online forums were buzzing at the start of Wednesday’s trading, after undergoing sharp reversals in the previous session. AMC Entertainment Holdings was up 8.6%, down 41% on Tuesday. GameStop was up 13% after dropping 60% on Tuesday. Treasury Secretary Janet Yellen called a meeting with key financial regulators to discuss the recent volatility in financial markets related to GameStop, a Treasury spokeswoman confirmed Tuesday night.

New economic data will offer clues about the health of the service sector. The Institute for Supply Management service index for January expires at 10 am ET, and is expected to show continued expansion in activity in January.

In the commodity markets, Brent crude, an international reference in oil, rose 1.2%, to US $ 58.14 a barrel. The indicator is close to its highest level since the pandemic shook global financial markets last spring.

Silver prices rose 2% to $ 26.9 a troy ounce.

In the bond market, the yield on the 10-year Treasury note maintained gains after the Treasury Department said it plans to maintain the size of its nominal note and bond sales this quarter. It recently rose to 1.117% from 1.105% on Tuesday.

Abroad, the pan-continental Stoxx Europe 600 rose 0.4%.

Italy’s FTSE MIB stock index outperformed other regional benchmarks after former European Central Bank president Mario Draghi was asked to form a new government. Yield on the country’s 10-year bonds fell to 0.581%, from 0.651% on Tuesday.

In Asia, Japan’s Nikkei 225 rose 1%. Hong Kong’s Hang Seng rose 0.2%, while on the Chinese mainland, the Shanghai Composite Index fell 0.5%.

Write to Will Horner at [email protected]