Wall Street gains on Fiscal Aid Hopes as Disney Surprises on Quarterly Profit
Wall Street’s main indexes rose on Wednesday after Disney delivered a surprise quarterly profit, with sentiment aided by signs that a coronavirus fiscal relief package was imminent.
Walt Disney Co’s (DIS.N) shares jumped 9.5%, among the biggest boosts to the S&P 500 and Dow, as revenue declines for its parks and media networks were not as bad as feared.
Payments processor Square Inc (SQ.N) surged 8.7% after reporting a 64% rise in second-quarter revenue, as consumers increased online buying and used its peer-to-peer Cash App platform during the pandemic.
“The analysts were too pessimistic for the second quarter, and corporate America and consumers refused to stand down,” said Gerald Sparrow, chief investment officer of the Sparrow Growth Fund in St. Louis, Missouri.
Better-than-feared corporate results and a surge in shares of heavyweight technology companies have fueled a stimulus-driven rally in Wall Street’s main indexes, bringing the S&P 500 within 2% of its record high hit in February.
Meanwhile, U.S. services industry activity gained momentum in July, according to an ISM survey, as new orders jumped to a record high. However, hiring declined, supporting views that a recovery in the labor market was faltering.
Earlier in the day, a loose precursor to the monthly jobs report on Friday showed U.S. private employers hired far fewer workers than expected last month.
“The (ADP) number confirms what the Fed is saying, that there’s going to be fits and starts with this economy,” said Sparrow.
Concerns about signs the U.S. economic activity is stalling amid a surge in cases of the novel coronavirus in parts of the country has strengthened the case for more fiscal aid.
Congressional Democrats and White House officials were set to resume negotiations on coronavirus relief legislation on Wednesday, with administration officials aiming for an agreement by Friday.
Financials .SPSY, industrials .SPLRCI and materials .SPLRCM, that track economic growth, outperformed among the major S&P sectors. The energy index .SPNY strengthened as oil prices jumped nearly 3%.
At 12:52 p.m. ET, the Dow Jones Industrial Average was up 309.55 points, or 1.15%, at 27,138.02, the S&P 500 was up 18.13 points, or 0.55%, at 3,324.64. The Nasdaq Composite was up 33.04 points, or 0.30%, at 10,974.21.
Teladoc Health Inc (TDOC.N) fell 15% after agreeing to buy chronic care provider Livongo Health Inc (LVGO.O) in a deal valuing the company at $18.5 billion, betting on a boom in online care and consultations spurred by the coronavirus crisis. Livongo shares also fell 7.7%.
Electric truckmaker Nikola Corp NKLA.O slumped 11.1% after it reported a bigger quarterly loss in its first results as a listed entity.
Advancing issues outnumbered decliners for a 2.21-to-1 ratio on the NYSE and a 1.62-to-1 ratio on the Nasdaq.
The S&P index recorded 43 new 52-week highs and no new low, while the Nasdaq recorded 192 new highs and eight new lows.