(Reuters) - The S&P 500 and the Dow indexes rose on Tuesday as investors poured into economically sensitive sectors on bets that fiscal stimulus would revive a pandemic-battered economy, with a slate of positive earnings reports also helping the sentiment.
Financials, industrials and energy provided the biggest boost to the S&P 500 and the Dow. The energy sector jumped 6.4% on prospects of higher demand for fuel. [O/R]
The Nasdaq slipped after hitting an intraday record high earlier in the session, as shares of high-profile companies including Amazon.com Inc, Apple Inc and Microsoft Corp retreated.
U.S. lawmakers and White House officials are negotiating a new coronavirus aid legislation amid a looming expiration of additional unemployment assistance that would leave tens of millions of Americans without an income.
Overnight, European Union leaders agreed on a historic coronavirus relief plan for the bloc.
“The big stimulus package that the European Union decided to do is definitely putting a bid under all equities worldwide including the U.S.,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina.
“The vaccine story has been very positive for the last couple days and that’s part of the optimism on moving a little bit more towards cyclicals.”
Promising early data from trials of three potential vaccines has helped the S&P 500 rise about 1% on the year. The Dow is still down about 6% in 2020 while the Nasdaq has climbed 19%.
With the second quarter expected to see the worst of the pandemic’s hit on profits, investors are more focused on hints on how long Corporate America would take to bounce back.
International Business Machines Corp gained 0.8% after it signaled higher demand in its cloud computing business, as large corporations accelerate their digital shift.
Coca-Cola Co rose 2.4% as it said demand for its sodas were improving after the “most challenging” quarter for the year.
“Commentary on earnings call has been really important to investment communities, confirming the recovery story that’s seen in the broad (economic) data applied to individual businesses, like Coca Cola,” said Matt Stucky, portfolio manager, equities, at Northwestern Mutual Wealth Management Co in Milwaukee, Wisconsin.
At 12:47 p.m. ET, the Dow Jones Industrial Average was up 302.71 points, or 1.13%, at 26,983.58 and the S&P 500 was up 16.15 points, or 0.50%, at 3,267.99. The Nasdaq Composite was down 52.42 points, or 0.49%, at 10,714.67.
Lockheed Martin Corp rose 2.9% as the U.S. weapons supplier raised its full-year profit and revenue forecasts, driven by higher quarterly sales in its aeronautics unit that makes the F-35 fighter jet.
Advancing issues outnumbered decliners by a 4.26-to-1 ratio on the NYSE and by a 1.83-to-1 ratio on the Nasdaq.
The S&P index recorded 43 new 52-week highs and no new low, while the Nasdaq recorded 115 new highs and nine new lows.
Reporting by Medha Singh in Bengaluru; Editing by Shounak Dasgupta and Maju Samuel