By William Watts and Sunny Oh
U.S. stocks finished sharply higher on Tuesday, moving towards new records with investors encouraged by news on the pace of vaccinations in the U.S., the prospect of more fiscal aid from Congress, and a decline in the frenzy of retail trading in heavily shorted stocks.
A slate of earnings reports also drew focus Tuesday, including results that came in ahead of the opening bell from Pfizer Inc. /zigman2/quotes/202877789/composite PFE +0.03% and ExxonMobil Corp. /zigman2/quotes/204455864/composite XOM +2.89% , while big tech companies Google parent Alphabet GOOGL GOOG and Amazon /zigman2/quotes/210331248/composite AMZN -1.97% reported their results after the close and both reported better-than-estimated sales, with the online retail giant saying Chief Executive Officer Jeff Bezos will step down from his post in the third quarter of 2021.
How did stock benchmarks perform?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.16% jumped 475.57 points, or 1.6%, to 30,687.48, its biggest such percentage gain since Nov. 16.
The S&P 500 /zigman2/quotes/210599714/realtime SPX -0.41% advanced 52.45 points, or 1.4%, to finish at 3,826.31, off by less than a percent away from its record close of 3855.36.
The Nasdaq Composite /zigman2/quotes/210598365/realtime COMP -0.99% was up 209.38 points, or 1.6%, to end at 13,612.78, inches away from its closing high of 13635.99.
On Monday , stocks finished sharply higher. The Dow closed up 229.29 points, or 0.8%, at 30,211.91, the S&P 500 added 59.62 points, or 1.6%, to settle at 3,773.86, and the Nasdaq Composite Index finished with a gain of 332.70 points, or 2.6%, touching 13,403.39.
What’s driving the market?
After dizzying moves in popular, but relatively small, companies GameStop Corp. /zigman2/quotes/203755179/composite GME +18.11% and AMC Entertainment /zigman2/quotes/200235402/composite AMC +5.77% , investors may be training their attention on corporate quarterly results in the second-most active week of the fourth-quarter earnings season.
So far the numbers have been promising, even amid the coronavirus pandemic, with 81% of the 189 S&P 500 companies that had reported through Monday exceeding consensus expectations, FactSet data show.
Stocks extended their bounce back after major benchmarks ended Friday with the biggest weekly loss since October as the trading drama around GameStop and other shares triggered liquidation of long positions by hedge funds and other traders. GameStop rose about 400% last week, but has lost more than 70% of its value since Friday.
“There were fears that the GameStop trading frenzy would spill over into the broader market. that doesn’t seem to have been the case,” said Michael Reynolds, investment strategy officer at Glenmede Trust, in an interview.
“It’s a return to the same drivers of the market. Fiscal stimulus and vaccine progress continue to be tailwinds,” said Reynolds.
The CDC’s vaccine tracker is showing that as of 6 a.m. Eastern Tuesday, 32.8 million doses had been administered so far, which is more than the confirmed case tally. So far, 52.7 million doses have been delivered to states.
Hospitalizations have also been falling, according to the COVID Tracking Project. There were 93,536 COVID-19 patients in U.S. hospitals on Monday, down from 95,013 a day earlier and the lowest level since Nov. 29.
”Perhaps the most understated recovery has been in the number of daily COVID-19 cases and the hospitalization rate which had been improving well before the vaccine distribution began,” wrote analysts at Jefferies, led by Sean Darby, global equity strategist.
Cyclically oriented sectors, which are more closely tied to the ups and downs of the economy, were leading the way higher on Tuesday, with the financials and energy sectors both up around 2.5%. Banks stocks found support on a steepening of the yield curve.
Discussions around another round of coronavirus relief from Congress also were drawing attention on Wall Street, after a group of Senate Republicans outlined on Monday a roughly $618 billion offer , including a round of $1,000 direct checks for many adults.