U.S. indexes hit one-month highs as tech stocks rally
This is a file image of various stocks.
Marley Jay, The Associated Press
Published Monday, January 14, 2019 11:39PM EST
Last Updated Tuesday, January 15, 2019 1:57PM EST
NEW YORK -- U.S. stocks are broadly higher, but have given up a chunk of their early gains after British legislators soundly rejected Prime Minister Theresa May's plan governing the country's departure from the European Union.
Netflix leads a rally in internet and technology companies after saying it will raise prices for its subscription plans in the U.S. China's also government said it plans to cut taxes, a step that could generate more business for tech companies. Health care companies and banks rose as major companies including UnitedHealth and JPMorgan Chase announced their fourth-quarter results.
KEEPING SCORE: The S&P 500 index rose 18 points, or 0.7 per cent, to 2,600 at 2:45 p.m. Eastern time. It climbed as much as 1.2 per cent earlier and hasn't closed at 2,600 since Dec 13. The Dow Jones Industrial Average added 72 points, or 0.3 per cent, to 23,981. The technology-heavy Nasdaq composite jumped 85 points, or 1.2 per cent, to 6,991. The Russell 2000 index of smaller-company stocks gained 6 points, or 0.5 per cent, to 1,439.
BRITAIN VOTE: The House of Commons rejected the deal May negotiated with EU leaders by a vote of 432-202. Britain is scheduled to leave the EU on March 29 after a June 2016 referendum where a narrow majority of UK subjects voted to take Britain out of the union. It's not clear what will happen to May's government, which faces a vote of no confidence, or the economies and financial systems of Britain and the rest of Europe.
The pound dipped as low as $1.2670 ahead of the vote and later traded at $1.2820, from $1.2865 late Monday. The British FTSE 100 index closed up 0.6 per cent. It's down 11 per cent over the last year.
British banks mostly fell. Barclays lost 1.3 per cent to $8.15 and Lloyd's shed 2.1 per cent to $2.81.
Lindsey Bell, investment strategist at CFRA, noted that British stocks have continued to rise since the 2016 referendum because the global economy and company profits kept growing.
"The market has taken it in stride," she said. "Maybe when we get closer to March 29th, when they're officially done without a deal, you could see more volatility then."
BANDER-SNATCHING MORE DOLLARS: Netflix announced the biggest price increase in its history. The price of its most popular video-streaming plan will rise $13 per month from $11. That will help to pay for Netflix's huge investment in original shows and films and finance the heavy debt it has assumed to ward off rivals such as Amazon, Disney and AT&T. Its stock climbed 6.1 per cent to $353.39. Netflix stock has jumped 32 per cent in 2019 but was worth almost $420 a share in July.
Companies including Facebook and Alphabet, Google's parent company, rallied as well.
CHINA'S ECONOMY: Chinese leaders plan to slash taxes, increase government spending, and provide financing to private and small enterprises in a bid to strengthen the world's second-largest economy. China is enduring its worst slowdown since the global financial crisis amid a punishing tariffs dispute with the U.S.
"It shows clear signs they are worried about the economy," said Bell. But to investors, who want China's economy to pick up again, the latest steps were "really welcome news," she said.
That helped tech companies, which make big chunks of their sales in China. Microsoft rose 2.3 per cent to $104.39 and Broadcom climbed 2.7 per cent to $257.54.
Hong Kong's Hang Seng rebounded 2 per cent, wiping out a loss on Monday. It's moved higher this month but is still down almost 19 per cent from its peak in late January 2018.
Japan's Nikkei 225 index, reopening after a market holiday, added 1 per cent. The Kospi in South Korea jumped 1.6 per cent.
PAINT IT BLACK: Paint and coatings maker Sherwin-Williams said it was "disappointed" with its sales in October and November, and its profit and sales in the fourth quarter fell short of Wall Street's estimates. Its stock fell 4.2 per cent to $381.08. Other coatings makers also struggled, as PPG Industries skidded 1.2 per cent to $100.71. Home improvement retailer Home Depot gave up 1.3 per cent to $176.46 and Lowe's slid 2.3 per cent to $94.69.
AIR SICK: Delta Air Lines became one of the first companies to detail how the partial shutdown of the federal government is affect its business. The airline says it's on pace to lose $25 million in revenue this month. CEO Ed Bastian said the shutdown is keeping Delta from using new Airbus jets because the planes must be certified by safety regulators. They have been furloughed since Dec. 22 in the longest U.S. government shutdown ever.
An unusually high number of airport screeners have been missing work after they did not get paychecks last week, contributing to long lines at some airports.
Delta stock gyrated and was up 0.1 per cent at $47.78 in afternoon trading.
ENERGY: Oil prices rose as investors felt a bit better about China's economic growth. Benchmark U.S. crude added 3.2 per cent to $52.11 a barrel in New York. The international standard, Brent crude, gained 2.8 per cent to $60.64 a barrel in London.
BONDS: Bond prices were little changed after an early gain. The yield on the 10-year Treasury remained at 2.71 per cent.
EUROPE: Germany's DAX edged 0.3 per cent higher and the CAC 40 in France picked up 0.5 per cent.
CURRENCIES: The dollar rose to 108.63 yen from 108.20 yen. The euro dipped to $1.1387 from $1.1465.
Annabelle Liang contributed from Singapore.