Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

Dow Rallies as Cyclicals Shine; GameStop Loses Mojo

Published 02/02/2021, 18:53
Updated 02/02/2021, 18:56
© Reuters.

By Yasin Ebrahim

Investing.com – The Dow rallied on Tuesday, driven by a rally in cyclical stocks on optimism over the vaccine rollout and mostly positive earnings ahead of major reports from Google and Amazon.

The Dow Jones Industrial Average rose 1.89%, or 569 points. The S&P 500 was up 1.75%, while the Nasdaq Composite jumped 1.78%. 

Financials, mostly banks, led the move higher as bank stocks were supported by rising bond yields on bets for a faster recovery as the Covid-19 vaccine roll out continues amid slowing Covid-19 infection rates.

Bank of America (NYSE:BAC), and JPMorgan Chase (NYSE:JPM) jumped 3%, while Goldman Sachs Group (NYSE:GS) was up 4%. Rising U.S. government bond yields tend to boost the net interest income that banks earn on their loan products.

Coronavirus infections remained below 150,000 for the fifth day in a row.

A slew of mostly positive earnings supported investor sentiment on stocks.

Pfizer (NYSE:PFE) raised its full-year earnings guidance and reported mixed earnings as earnings missed, but revenue topped Wall Street estimates in the fourth quarter. The drug maker said it expects to sell $15 billion worth of its Covid-19 vaccine this year and brought forward its  200 million U.S. production to May from July.

United Parcel Service (NYSE:UPS), meanwhile, topped quarter and earnings and revenue as the pandemic-fueled demand in online shopping boosted deliveries.            

Harley-Davidson (NYSE:HOG) slipped more than 18% after reporting an unexpected loss in the fourth quarter as shipments fell short of expectations to a more than 20-year low. The company, however, has a five-year turnaround plan aimed at generating low double-digit earnings growth through 2025.

The shift to focus on earnings comes as the short-squeeze trade appears to have run out of steam. GameStop (NYSE:GME) plunged even as Robinhood lifted restrictions on buying shares in the video game retailer.

AMC Entertainment Holdings (NYSE:AMC) slipped 43%, BlackBerry (NYSE:BB) fell 20%, and Nokia (HE:NOKIA) Corp ADR (NYSE:NOK) was down 8%.

Tech, meanwhile, is expected to come under further scrutiny after the closing bell as Amazon.com (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL) report results.

Amazon.com’s high margin cloud business, Amazon Web Services, will be one of the key takeaways for investors in the wake of an acceleration in the number of companies transitioning to the cloud.

“We believe there is ample room for upside to profitability in Q4, aided by lower-than-expected COVID-related expenses,” Wedbush said in a note.

Walt Disney (NYSE:DIS), meanwhile, was one of the biggest gainers on the Dow ahead of its quarterly results due later this week. Qualcomm (NASDAQ:QCOM), eBay (NASDAQ:EBAY) and PayPal Holdings (NASDAQ:PYPL) are also among the notable companies set to report earnings later this week.

In other news, Uber (NYSE:UBER) jumped 4% after it announced a deal to acquire alcohol-delivery service Drizly for $1.1 billion.  Drizly will be incorporated into Uber Eats business, and the deal is expected to close in the first half of 2021.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.