Stock gains accelerated midday Wednesday, as optimism on a Coronavirus vaccine prevailed, oil prices rose considerably and earnings rolled in. The tech-heavy Nasdaq lead the way in the U.S.
All three major U.S. indices rose, with the S&P 500 up 2.1% and the Nasdaq up as much as 2.48%.
Britain’s Oxford is getting a virus vaccine towards the human resting stage, while German medical experts are doing the same. Brent crude oil showed signs of life, rising 18% to $13.7 a barrel.
Facebook (FB) - Get Report, Google (GOOGL) - Get Report and Microsoft (MSFT) - Get Report rose 6.6%, 3.5% and 3%, respectively. These stocks have a combined market capitalization of about $2.5 trillion.
Netflix (NFLX) - Get Report shares were down 2%, even after the company posted almost double the number of subscribers analysts had forecasted for the quarter and said the second quarter would look similar. But the stock had run up 35% for the year into the earnings, which revealed that revenue may not grow as explosively as the subs numbers because average revenue per user fell considerably in some international markets. Some new users opted for very low priced plans. Currency headwinds also hurt revenue dollars.
But tech investing has been a theme in the S&P 500’s 24% bounce off of its March 23 low. Facebook, Google and Microsoft all have strong balance sheets that can help the companies whether headwinds posed by lockdowns and secular growth drivers, less so with Google. Advertising dollars can see a huge impact during recessions, which analysts have modeled in, hurting Facebook and Google. But one potential tailwind is possibly a stronger consumer than previously anticipated, a positive for ad spend on internet platforms.
CEO Brian Niccol also mentioned consumers may spend some of their government checks of roughly $1,200 a month on food and restaurants.
Restaurant companies with a strong digital presence rose considerably, as McDonald’s (MCD) - Get Report and Starbucks (SBUX) - Get Report rose 4% and 5% respectively. They have earnings upcoming. Chipotle rose 12%, although Morgan Stanley analysts say the stock is getting ahead of itself as analysts an investors alike price the stock, like many, more on a multiple of 2021 earnings rather than 2020.
The market is looking past what will be a rough first half of 2020, sending valuations soaring. Many caution that virus and lockdown risks loom.