Stocks Rise as Earnings Roll In; Treasuries Drop: Markets Wrap

(Bloomberg) -- Stocks rose after the biggest back-to-back rally in three months as traders assessed corporate earnings. Treasuries fell.

Energy and financial shares in the S&P 500 outpaced tech companies even after Alphabet Inc.’s stellar results. Banks climbed as JPMorgan Chase & Co. and Morgan Stanley issued bullish calls on the industry. The Dow Jones Industrial Average underperformed. GameStop Corp., the poster child for Redditors looking to squeeze short sellers, and movie-theater chain AMC Entertainment Holdings Inc. rose, but at a much slower pace relative to the peak of the day-trading frenzy.

Bonds retreated as the U.S. Treasury held steady its planned issuance of longer-dated securities at a quarterly debt auction next week, with officials awaiting the result of the government’s push for a fresh coronavirus relief package. Data Wednesday showed companies added more jobs than forecast in January, while growth at U.S. service providers unexpectedly accelerated. The scattered signs of an economic pickup come as President Joe Biden tries to win congressional passage of a $1.9 trillion stimulus proposal.

“There has been a ton of noise in the stock market these past few weeks, so it’s encouraging to see solid economic reads,” said Mike Loewengart, managing director of investment strategy at E*Trade Financial Corp. “There may be signs of overextension when it comes to single stocks, but under the surface there is an economy regaining serious momentum.”

Normalcy has yet to return to the Cboe Volatility Index even after its biggest two-day decline in about three years. Tuesday’s close was 31% higher than the average since VIX calculations began in 1990, according to data compiled by Bloomberg. There hasn’t been a below-average close in about a year. VIX futures are indicating that “volatility will remain elevated for many months,” Nicholas Colas, co-founder of DataTrek Research LLC, wrote Tuesday in a report.

These are some key events coming up:

• The Bank of England sets rates on Thursday and an Indian central bank policy decision is due Friday.
• The U.S. January payrolls report is due Friday, providing a first look at hiring in 2021.

These are some of the main moves in markets:

Stocks

• The S&P 500 rose 0.3% as of 11:50 a.m. New York time.
• The Stoxx Europe 600 Index climbed 0.3%.
• The MSCI Asia Pacific Index increased 1.1%.

Currencies

• The Bloomberg Dollar Spot Index advanced 0.1%.
• The euro dipped 0.2% to $1.2019.
• The Japanese yen depreciated 0.1% to 105.06 per dollar.

Bonds

• The yield on 10-year Treasuries increased two basis points to 1.12%.
• Germany’s 10-year yield climbed two basis points to -0.47%.
• Britain’s 10-year yield advanced two basis points to 0.367%.

Commodities

• West Texas Intermediate crude increased 2% to $55.86 a barrel.
• Gold lost 0.2% to $1,834.30 an ounce.
• Silver strengthened 0.7% to $26.86 per ounce.

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