Wall Street closes higher as upbeat Cisco and Disney results help fuel optimism

By Sinéad Carew NEW YORK (Reuters) - Wall Street closed higher on Friday with upbeat earnings reports helping to drive optimism about the economy along with hopes for successful COVID-19 vaccines even as investors monitored a surge in virus cases and restrictions around the country. After a volatile trading week where the market was whipsawed between hopes and fears around the virus, Cisco Systems Inc provided the biggest boost to the S&P 500 after its quarterly report showed a work-from-home driven surge in demand.

Reuters November 14, 2020 03:05:39 IST
Wall Street closes higher as upbeat Cisco and Disney results help fuel optimism

Wall Street closes higher as upbeat Cisco and Disney results help fuel optimism

By Sinéad Carew

NEW YORK (Reuters) - Wall Street closed higher on Friday with upbeat earnings reports helping to drive optimism about the economy along with hopes for successful COVID-19 vaccines even as investors monitored a surge in virus cases and restrictions around the country.

After a volatile trading week where the market was whipsawed between hopes and fears around the virus, Cisco Systems Inc provided the biggest boost to the S&P 500 after its quarterly report showed a work-from-home driven surge in demand.

Walt Disney Co also rose as its rapidly growing streaming video business, and a partial recovery at its theme parks tempered its quarterly loss.

"At least for today it looks like sentiment regarding the potential for vaccines combined with very strong earnings announcements from a number of companies has investors hopeful that the economy can continue to recover," said Michael Arone, chief investment strategist at State Street Global Advisors.

Unofficially, the Dow Jones Industrial Average <.DJI> rose 378.85 points, or 1.3%, to 29,459.02, the S&P 500 <.SPX> gained 46.99 points, or 1.33%, to 3,584 and the Nasdaq Composite <.IXIC> added 113.97 points, or 0.97%, to 11,823.55.

Friday's outperformance of more economically sensitive sectors including energy <.SPNY>, and industrials <.SPLRCI> over growth sectors like technology <.SPLRCT> was a clear indication of "optimism around the economy getting back on its footing," said Tom Martin, senior portfolio manager at Globalt Investments in Atlanta.

The three major U.S. stock indexes had fallen on Thursday as more than a dozen U.S. states reported a doubling of new COVID-19 cases in the last two weeks, with Chicago's mayor issuing a month-long stay-at-home advisory.

But a senior adviser to President-elect Joe Biden said there were no plans for nationwide lockdowns next year and instead talked about restrictions for specific regions when the virus spread is bad there.

State Street's Arone said the aversion to a full lockdown likely cheered up some investors. But he was concerned that investor optimism may be overdone, particularly as Fed officials have been warning about the potential damage rising virus cases could do to the economy without a fresh economic stimulus package in sight.

"The market is underestimating some of the impact that rising cases and no stimulus will have on the economy and earnings and they're over estimating the potential timeline and breadth of a vaccine distribution," Arone said.

"In the spring folks were bracing for the worst and the worst didn't happen. Now they're expecting the best and they may be a little too rosy."

Positive data from Pfizer's vaccine study earlier this week had prompted a rotation into the cyclical sectors, boosting the S&P 500 <.SPX> and Dow <.DJI>.

The tech-heavy Nasdaq <.IXIC>, however, underperformed as investors booked profits in technology stocks, which have benefited from a stay-at-home environment.

Globalt's Martin also pointed to hopes for news of more coronavirus vaccine progress, after Moderna Inc said earlier this week that it had enough data for a first interim analysis of its late-stage trial.

With third-quarter reports released from about 90% of S&P 500 companies Refinitiv IBES estimates now show profits falling 7.8% from last year compared with an Oct. 1 expectation for a 21.4% slump.

Meanwhile, Biden's victory in the battleground state of Arizona expanded his electoral vote margin, but the official transition remains in limbo as President Donald Trump refuses to concede.

Value stocks <.RLV>, which include mostly cyclical sectors such as banks and energy, outperformed the growth index <.RLG>, which is largely comprised of tech companies.

(Additional reporting by Stephen Culp in New York, Medha Singh and Shivani Kumaresan in Bengaluru; Editing by Saumyadeb Chakrabarty, Shounak Dasgupta and Tom Brown)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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