All three major U.S. indices rose substantially, with the S&P 500 up as much as 1.3% and the tech-heavy Nasdaq up as much as 0.7%. The 10-Year Treasury yield rose to 0.65%.
Moderna said its first human testing in the U.S. for its coronavirus vaccine was yielding positive results. The stock rose 8% to $81 a share.
Cyclical sectors, especially those sensitive to reopenings outperformed. Airlines rallied more than 5%. Oil rose a bit less than 2%. The s&P 500 Equal Weight Consumer Discretionary Index rallied 2.7%.
Goldman Sachs (GS) - Get Goldman Sachs Group, Inc. (GS) Report shares rose 3.4% to $221 and are now trading almost even with its book value, a premium valuation for a bank in the COVID environment, as the investment bank crushed revenue and earnings estimates. Goldman follows JPMorgan (JPM) - Get JPMorgan Chase & Co. (JPM) Report and Citigroup (C) - Get Citigroup Inc. Report as the latest investment bank to show it can beat estimates on the strength of trading and investment banking revenue, while lending is pressured by weak demand and low net interest margins.
The bank did have $1.5 billion in credit loss provisions, cash set aside as an expense to absorb potential credit losses, a theme this quarter for banks, as it indicates weak credit and spending from consumers. But investors had already seen that dynamic with bank earnings Tuesday and was less of a consideration in the market Wednesday.
The S&P 500 reached the level it was at on June 8 before cyclical value stocks went into correction territory. That’s because big tech has rallied, as investors have sought growth opportunities that can power through economic and virus-related challenges. Big tech names trading at stretched valuations are showing signs of pressure before earnings. Netflix (NFLX) - Get Netflix, Inc. (NFLX) Report and Microsoft (MSFT) - Get Microsoft Corporation (MSFT) Report were both pressured, with Netflix down a tick.
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