U.S. stocks finished sharply higher Tuesday as investors weighed stimulus efforts by the People’s Bank of China and actions by Beijing to combat the economic impact of a deadly Asian virus that has claimed hundreds of lives and infected more than 20,000 people.
The tech-heavy Nasdaq benchmark carved out a new closing record, aided by a surge in shares of Tesla Inc.,
TSLA, +13.73%
which have experienced a parabolic climb in the past few trading sessions.
How did stock benchmarks fare?
The Dow Jones Industrial Average
DJIA, +1.44%
rose 407.82 points, or 1.4%, to finish at 28,807.6, the S&P 500 index
SPX, +1.50%
gained 48.67 points, or 1.5%, to end at 3,297.59. The Nasdaq Composite Index
COMP, +2.10%
advanced 194.57 points, or 2.1%, to close at a record 9,467.97, surpassing its previous closing high on Jan. 23.
All three major benchmarks took back the ground lost during Friday’s coronavirus-related rout.
What drove the market?
The coronavirus has infected more than 20,000 people in China and claimed 465 lives, according to China’s National Health Commission. The People’s Bank of China offered funds in the overnight market to the tune of 500 billion yuan ($71 billion) on Tuesday to ease the economic stress of containing the viral outbreak, according to The Wall Street Journal. This follows an initial injection of 1.2 trillion yuan into the Chinese banking system on Monday.
Markets have been fairly upbeat on the back of efforts by the PBOC to contain the virus and its attempts to stanch economic fallout for China.
“As we’ve seen with many volatility shocks, as soon as the market stabilizes for whatever reason, such as central bankers taking measures to stabilize the economy, it then gives investors confidence to go into risk assets again,” Clifton Hill, global macro portfolio manager for Acadian Asset Management, told MarketWatch.
Politics also were drawing outsize attention in Tuesday trade as investors awaited a State of the Union address at 9 p.m. Eastern Time.
Also see: How the stock market has reacted to State of the Union speeches
Wall Street investors focused on the Democratic race for the 2020 presidential nomination, after technology problems and reporting inconsistencies kept Iowa Democratic Party officials from releasing results from Monday’s caucus, the first contest in a six-month process.
Sen. Bernie Sanders, the Vermont independent, released figures showing he was in front, while the former mayor of South Bend, Ind., Pete Buttigieg, claimed victory, saying that “by all indications, we are going on to New Hampshire victorious.” New Hampshire will be the location of the second primary contest for Democrats on Feb. 11.
“A victory for Sanders or Sen. Elizabeth Warren could be a headwind for markets, stoking concern among investors of the potential for higher taxes, antitrust probes, and restrictions on drug prices,” wrote Mark Haefele, global chief investment officer at UBS Global Wealth Management, in a Tuesday note.
Trump, meanwhile, is expected to be cleared by the Senate on Wednesday in his impeachment trial.
Economic data was light Tuesday, although the Commerce Department said factory orders rose 1.8% in December, beating expectations for a 1.5% rise among economists surveyed by MarketWatch.
Which stocks were in focus?
- Shares of Google parent Alphabet Inc.
GOOG, -2.62%
GOOGL, -2.51%
fell 2.6% and 2.5%, respectively, after it reported revenue below Wall Street estimates late Monday. The company also is being probed over location tracking by the Irish Data Protection Commission. - Shares of Clorox Co.
CLX, +4.99%
gained 5% after reporting upbeat results. - Shares of Apple Inc.
AAPL, +3.30%
gained 3.3% after a report that the company’s suppliers planned to resume full-scale production Feb. 10, despite coronavirus concerns. - Sirius XM Holdings Inc.
SIRI, +0.56%
gained 0.6% Tuesday after it reported in-line profit for its fourth quarter, while beating expectations on revenue for the period. - Shares of McKesson Corp.
MCK, +3.72%
jumped 3.7%, after the drug distributor beat fourth-quarter earnings expectations. - Shares of Tesla Inc
TSLA, +13.73%
surged 13.7% after the electric-vehicle maker drew bullish endorsements from investors and research analysts. Tesla shares jumped nearly 20% to an all-time high on Monday and are up nearly 112% year to date. - Shares of eBay Inc.
EBAY, +8.78%
shot up 8.8% after The Wall Street Journal reported that Intercontinental Exchange Inc. has approached the e-commerce company multiple times regarding a takeover.
How did other markets trade?
Government bond yields surged, with the yield on the 10-year U.S. Treasury note
TMUBMUSD10Y, -0.16%
gaining 8.3 basis points to 1.60%, the biggest one-day gain for the benchmark bond since Dec. 12, according to Dow Jones Market Data.
Oil prices fell to their lowest settlement in more than a year, with the price of a barrel of West Texas Intermediate crude for March delivery
CLH20, +0.65%
dropping 1% to $49.61. In precious metals, the price of an ounce of gold for April delivery
GCJ20, +0.18%
declined 1.6% to settle at $1,556.70, its lowest close since Jan. 22.
The U.S. dollar
DXY, +0.00%
rose 0.2% relative to a basket of six major peers.
In Europe, the Stoxx Europe 600
SXXP, +1.64%
recorded a gain of 1.6%.
In Asia overnight, stocks rose significantly. The China CSI 300
000300, +2.64%
added 2.6%, Japan’s Nikkei 225
NIK, +0.94%
added 0.5% and Hong Kong’s Hang Seng
HSI, +1.21%
advanced 1.2%.
Source : MTV
