Stocks rise as investors focus on solid corporate earnings

WWL Newsroom
February 06, 2020 - 2:00 pm

Specialist Jay Woods works at his post on the floor of the New York Stock Exchange, Thursday, Feb. 6, 2020. U.S. stocks rose in midday trading Thursday as investors continued focusing on the latest round of corporate earnings and China cut tariffs on key imports as part of a trade war truce. (AP Photo/Richard Drew)

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Technology companies led stocks higher on Wall Street in afternoon trading Thursday, adding to the market's solid gains this week.

Major indexes were on track for more record highs as investors continued focusing on the latest round of corporate earnings. Twitter and Coach brand owner Tapestry were among the standouts following their latest financial results.

News that China has cut tariffs on $75 billion of U.S. imports, including pork, soybeans and auto parts, as part of a previously signed “Phase 1” trade agreement with Washington also helped put traders in a buying mood. The reductions follow U.S. tariff cuts last month on Chinese goods.

“It's certainly good news and something unexpected. The Chinese, in a sense, are showing deference and offering an olive branch to the U.S. ahead of the ‘Phase 2’ negotiations," said Sam Stovall, chief investment strategist at CFRA.

Beijing is also promising tax cuts and other help to businesses in a bid to offset the economic blow from the virus outbreak that has put the world's second-largest economy on lockdown. Companies continue to warn of an expected impact to revenue and profit, though the extent of the damage for many remains unclear.

Worries about the potential global economic fallout from the outbreak spurred a mid-January slump for U.S. stocks. Investors appear to have set aside those concerns this week, focusing instead on encouraging U.S. economic data and company earnings reports.

Information technology consulting firm Cognizant led the gainers in the technology sector, vaulting 9.2%.

The communication services sector also accounted for a big share of the market's gains, led by Twitter. Household goods companies and industrial stocks also rose. Those gains outweighed losses in energy stocks, financial companies and other sectors.

Bond yields held steady with the yield on the 10-year Treasury at 1.65%.

KEEPING SCORE: The S&P 500 index rose 0.3% as of 3 p.m. Eastern time. The Dow Jones Industrial Average rose 90 points, or 0.3%, to 29,381. The Nasdaq rose 0.5%. The Russell 2000 index of smaller company stocks fell 0.2%.

Markets in Europe and Asia finished broadly higher.

TWEET STORM: Twitter surged 17.3% after the messaging service reported surprisingly good growth for daily users and solid revenue in the fourth quarter. The most recent quarter marks the first time the company’s revenue topped $1 billion.

IN THE BAG: Coach parent Tapestry rose 3.9% after the company’s fiscal second-quarter profit and revenue beat Wall Street forecasts. The company, which also owns Kate Spade, did warn investors about a potential hit to its sales and profit because of the virus outbreak in China.

BAD TASTE: Yum Brands fell 3.8% after the operator of Pizza Hut, Taco Bell, and KFC restaurants reported weak fourth-quarter profit. The company also faces financial pain moving forward from the virus outbreak impact. China made up 27% of KFC's total sales and 17% of Pizza Hut's sales in the fourth quarter.

FRIENDLY MATTRESS: Online mattress pioneer Casper Sleep soared 20.3% in its public debut. The company, which was founded in 2014, has expanded beyond online selling, opening 60 Casper stores and selling to 18 retail partners like Target and Amazon. It has plans to eventually expand to more than 200 stores in North America.

ECONOMICS ON TAP: The government will release its closely watched monthly jobs report on Friday, along with several other economic indicators. A solid jobs market has been a key factor behind the strong U.S. economy. Economists expect the January jobs report to show more growth and they expect the unemployment to remain stable at 3.5%.

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AP Business Writer Damian J. Troise contributed.

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