Shares have not modified a lot on a busy day of earnings. The GE shares bounce
U.S. stocks barely changed Tuesday as Wall Street prepared for the heart of corporate earnings season.
The Dow Jones Industrial Average gained 26 points, or 0.1%. The S&P 500 and Nasdaq Composite traded near the flatline. The S&P 500 and Nasdaq both closed at record highs in the previous session.
Strong earnings results from some of the larger companies with greater influence on the indices supported the market on Tuesday. General Electric stocks rose 9% in the fourth quarter against better-than-expected industrial free cash flow and bright prospects for the year. Johnson & Johnson gained more than 3% after the drugmaker’s profits beat expectations.
Tech giant Microsoft will announce its second quarter results after the bell. Microsoft’s shares rose more than 1%.
In sharply shortened stocks, including GameStop and AMC Entertainment, volatility increased again as avid private investors active in chat rooms continued to oppose short-selling by hedge funds. The volatility has worried some investors that stocks are pulling away from fundamentals as speculation is rampant.
“The short squeeze / volatility we’ve seen in sharply downturned stocks like GameStop and others only further confirms that at least in the short term, complacent / foamy investor sentiment is the greatest short-term risk to stocks,” said Tom Essaye, founder of Sevens Report said in a note Tuesday.
GameStop gained another 20% on Tuesday. AMC grew by more than 10%.
Companies started the winning season with a high beat rate. Of the S&P 500 components that have already reported profits, over 70% have exceeded Wall Street expectations for sales and earnings, according to Bank of America.
“The combination of virus control and political support should support economic growth this year and encourage broader industry participation in the economy and a strong recovery in earnings in later quarters,” said Lauren Goodwin, economist and portfolio strategist at New York Life Investments .
The Biden government announced Tuesday that it could be open to optimizing suitability for future stimulus testing. President Joe Biden’s $ 1.9 trillion proposal calls for direct deposits of $ 1,400. However, the plan has been criticized by a non-partisan group of lawmakers for its high price.
On the Covid-19 front, health officials and policymakers continued to warn the public about new strains of the virus. Moderna said Monday that its vaccine offers some protection against a variant found in South Africa, while officials in Minnesota reported the first US-confirmed case of a strain found in Brazil.
Investors are also waiting for a new Federal Reserve policy statement as the central bank begins its two-day meeting on Tuesday.
Former Fed Chair Janet Yellen was confirmed as Treasury Secretary and was the first woman to hold the position.