More than 80% of reports from S&P 500 companies so far have surpassed analysts’ earnings expectations, according to IBES data from Refinitiv.
The major U.S. stock indexes surged for a second straight session on Tuesday, bolstered by gains in mega cap heavyweights Amazon.com and Google-parent Alphabet ahead of the release of their results after the close and by optimism over progress on a U.S. pandemic relief package.
Cash Market Performance
In the cash market on Tuesday, the benchmark S&P 500 Index settled at 3826.31, up 52.45 or +1.39%. The blue chip Dow Jones Industrial Average finished at 30687.48, up 475.57 or +1.57% and the tech-weighted NASDAQ Composite closed at 13612.78, up 209.39 or +1.56%.
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Volatility Plunges as Fresh Hedge Fund Cash Comes into Market
Wall Street’s fear gauge, the CBOE Volatility Index retreated as the recent market mania driven by highly organized retail traders over heavily shorted assets showed some signs of fizzling out. GameStop Corp, one of the stocks that had been pushed up sharply in last week’s frenzy, sank for a second day.
“Hedge funds are looking for places to put money and the easy trade for them is to go into big-cap stocks and probably the broad market in general, just to ensure that they are not left behind,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York, New York. “That’s probably where we’re getting all of the extra flows here.”
Stimulus Hopes, Drop in COVID Cases Fueling Optimism
Investors also were optimistic as Democrats in Congress prepared to take the first steps toward fast-track passage of President Joe Biden’s $1.9 trillion COVID-19 relief package. Adding to the upbeat mood, new cases of COVID-19 in the United States fell for a third week in a row, the first time since last September.
“Some form of the Biden proposal will pass, and there are certainly investors who are willing to look down the road and think the market and economy will look brighter,” said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.
Earnings Results Before the Bell
More than 80% of reports from S&P 500 companies so far have surpassed analysts’ earnings expectations, with 97% of reports from technology companies beating, according to IBES data from Refinitiv.
Exxon Mobil Corp posted its first annual loss as a public company. However, its shares were higher as its quarterly adjusted profit topped estimates.
Shares of United Parcel Service Inc climbed after it beat quarterly profit estimates on a surge in home delivery volume due to pandemic-fueled online purchases of holiday gifts and staples