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Market Snapshot: Dow up 200 points, Nasdaq back in positive territory as investors focus on earnings and optimism about potential COVID-19 vaccine

Major U.S. stock indexes are trading higher Wednesday afternoon, as investors focus on bright spots in corporate earnings and the race for a potential COVID-19 vaccine instead of rising coronavirus cases. Read More...

Major U.S. stock indexes are trading higher Wednesday afternoon, as investors focus on bright spots in corporate earnings and the race for a potential COVID-19 vaccine instead of rising coronavirus cases.

What are major indexes doing?

The Dow Jones Industrial Average DJIA, +0.74% traded 200 points higher, or 0.8%, to 26,841, after briefly rising as high as 27,071.33 at the start of the session. The S&P 500 index SPX, +0.91% rose 27 points, or 0.8%, to 3,224, after earlier erasing its year-to-date losses. The Nasdaq Composite COMP, +0.66% was up 42 points, or 0.4%, to 10,532, after trading higher in early trade.

The Dow on Tuesday gained 556.79 points, or 2.1%, to end at 26,642.59, while the S&P 500 advanced 42.30 points to finish at 3,197.52, a gain of 1.3%, as energy shares and materials shares rallied. The Nasdaq Composite index closed with a gain of 97.73 points, or 0.9%, to settle at 10,488.58, erasing losses seen earlier in Tuesday’s session.

What’s driving the market

U.S. stocks were higher in afternoon trade Wednesday, as investors focused on bright spots in second-quarter corporate earnings and the race for a potential COVID-19 vaccine.

Equity benchmarks got a boost early after Moderna Inc. MRNA, +8.12% said its coronavirus vaccine candidate produced a “robust” immune-system response in a larger group of people and that the study would move to a clinical trial in July.

Also U.K. television broadcaster ITV reported that positive news may come Thursday on initial trials of the Oxford Covid-19 vaccine that is backed by AstraZeneca AZN, +5.22% AZN, +7.56%.

“As the race for a COVID-19 vaccine makes progress, this has allowed investors to look beyond the surge in cases in hope that economic recovery will continue to endure,” said Michael Arone, chief investment strategist at State Street Global Advisors, in an interview with MarketWatch.

He also said analysts may have become “overly pessimistic as to the downside risk of COVID-19” on corporate earnings. “I think companies can easily step over negative earnings expectations,” he said. “We could see some pleasant surprises in this earnings season, which could keep momentum for stocks going.”

Mark Haefele, UBS Global Wealth Management’s chief investment officer, noted 13 vaccine candidates were in human clinical trials as of June 29. He expected a vaccine to be widely available, at its earliest, in the fourth quarter of this year, echoing hopes by Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, that a vaccine would arrive relatively soon.

Second-quarter corporate earnings also were in focus, after a trio of major banks kicked off the season Tuesday. On Wednesday Dow component Goldman Sachs Group Inc. GS, +1.00% GS, +1.00% delivered results that beat expectations for earnings, with shares up 0.5% at midday. The bank also reported its second highest revenues in history.

Related: Major banks are hauling in ‘big fees’ from debt and equity underwriting during the coronavirus crisis

In U.S. economic data Wednesday, the New York Federal Reserve Bank’s regional Empire State index for July posted its first positive reading since February.

Industrial production in June jumped by 5.4%, on top of the 1.4% gain in May. Wall Street economists had forecast a 4.1% increase, according to a MarketWatch survey.

Meanwhile, Philadelphia Fed President Patrick Harker on Wednesday said he would support a change in monetary policy where the central bank would let the economy run hot until inflation rises above the central bank’s 2% annual target before lifting interest rates. The Fed’s latest Beige Book report, an anecdotal compilation of economic activity across the country, is set for release at 2 p.m. Eastern.

Which companies are in focus?
  • Apple Inc. GS, +1.00% shares gained 0.4% after the iPhone maker won a court battle with the European Union in a dispute over a €13 billion ($15 billion) Irish tax bill.
  • Dow component UnitedHealth Group Inc. UNH, -2.43% shares fell 3.1% after the health care company reported a second-quarter profit that rose well above expectations, but revenue that came up short, as premiums and services revenue missed
  • Moderna MRNA, +8.12% shares surged 5.4% after the company’s positive vaccine announcement.
  • Amazon.com Inc. AMZN, -1.54% said it would create 1,000 new full-time jobs as it plans to open a new fulfillment center in Pflugerville, Texas. The e-commerce giant’s shares were down 2.4%.
  • Walmart Inc. WMT, +0.22% announced that face coverings will be required at all U.S. stores and Sam’s Club warehouses starting July 20. Its shares were up slightly.
  • Relay Therapeutics Inc. RLAY, , a clinical-stage oncology biotech, upsized and raised its expected price range for its initial public offering on Wednesday, with plans to offer 20 million shares priced at $18 to $19 each.
  • J.C. Penney Co. Inc. JCP, +1.20% shares were almost 6% higher after the retailer said it would cut about 1,000 jobs as it looks to closes 152 stores as part of its restructuring.
  • Forescout Technologies Inc. FSCT, +15.40% rallied 15.4% Wednesday after the cybersecurity company said its deal to be taken private by Advent International was back on but at a lower price.
How are other markets trading?

In Asia, the Shanghai Composite SHCOMP, -1.56% fell 1.6% to end at 3,361.30, while the CSI 300 Index 000300, -1.29% fell 1.3%. Japan’s Nikkei 225 Index NIK, +1.58% lost 1.6%, while the Hang Seng Index in Hong Kong HSI, +0.01% eked out a gain of 3.69 points to close at 25,481.58.

In Europe, the pan-European SXXP, +1.76% Stoxx 600 Europe Index settled 1.8% higher, while London’s FTSE 100 UKX, +1.82% was up 1.8%.

The yield on the benchmark 10-year Treasury note TMUBMUSD10Y, 0.639% rose 2 basis points to 0.63%. Yields and bond prices move in opposite directions. The ICE U.S. Dollar Index DXY, -0.17%, a measure of the currency against a basket of six major rivals, was off 0.2%.

Oil futures rose, with the U.S. benchmark CL.1, +1.91% up around 2% to $41.10 a barrel, on the New York Mercantile Exchange. Gold GC00, +0.05% futures were up 40 cents, trading at $1,813.80 an ounce.

William Watts contributed reporting

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