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Wall Street Opens Higher as Earnings Restore Momentum; Dow up 180 Ptts

Stock MarketsJul 21, 2021 10:40
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By Geoffrey Smith -- U.S. stock markets opened higher on Wednesday after a generally strong barrage of corporate earnings ensured that Tuesday's rebound extended into the new session. 

By 9:40 AM ET (1340 GMT), the Dow Jones Industrial Average was up 181 points, or 0.5%, at 34,693 points. The S&P 500 was up 0.4% and the Nasdaq Composite was up 0.2%. 

The Nasdaq's underperformance was down in part to Netflix (NASDAQ:NFLX), whose disappointing subscriber growth forecast for the next quarter was a sober reminder that the sugar rush enjoyed by winners from the pandemic can't last forever.

Netflix stock was one of very few in the red, losing 2.6%. Another was Harley-Davidson (NYSE:HOG) stock, which fell 4.1% after the motorcycle maker revised down its operating income forecast due to the impact of EU tariffs. 

Most other companies to report over the last few hours saw their stock prices rise, however. Chipotle Mexican Grill (NYSE:CMG) stock rose 8.5%, as reopened restaurants and rebounding sales more than outweighed warnings about higher input costs, from both raw materials and labor.  Likewise, Verizon (NYSE:VZ) stock rose 1.1% after it reported steady progress in the uptake of its 5G services, while United Airlines  (NASDAQ:UAL) stock rose 3.7% after it reported a sharp narrowing of its net loss in the second quarter. Coca-Cola (NYSE:KO) stock rose 2.4% as the reopening of economies across the world lifted sales across all its product lines. 

The market was undaunted by reports suggesting that the $3.5 trillion infrastructure bill pushed by Senate Democrats is unlikely to pass a procedural vote later Wednesday that would block the risk of a filibuster. Nor was it fazed by a fresh drop in weekly mortgage applications, a further sign that the red-hot housing market may be cooling off. Thirty-year mortgage rates have come down by some 25 basis points since April, as fears about inflation have given way to concerns about the sustainability of the economic recovery.

"This is going to sound odd but Monday's selloff was the best news that happened to the markets this year," said Lena Komileva of G+ Economics, via Twitter. "It was cathartic: markets have priced out the reopening and discounted the recovery."

European ADRs were also broadly stronger after some notable second-quarter releases. ASML (NASDAQ:ASML), the Dutch company that makes printing machines for semiconductors, rose 3.2% after raising its revenue growth forecast for this year to 35%, a clear sign of its ability to push up prices as chipmakers scramble for additional capacity. Daimler  (OTC:DDAIF) however underperformed after the maker of Mercedes-Benz cars and trucks warned that third-quarter sales would fall due to the short-term shortage of chips.

Elsewhere, Xpeng (NYSE:XPEV)ADRs rose 7.0%, in what appeared a delayed reaction to the launch of the electric vehicle maker's new sedan in China at a price that undercuts Tesla (NASDAQ:TSLA)'s Model 3 comfortably. Xpeng earlier this month completed a public offering in Hong Kong that has changed the dynamic of price formation for the ADRs, in that Chinese investors now get to react first to the company's news.



Wall Street Opens Higher as Earnings Restore Momentum; Dow up 180 Ptts

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