U.S. stocks rallied Tuesday to their highest level in more than a month after China's government moved to inject more life into that nation’s economy by cutting taxes and increasing spending. Netflix led a surge in high-tech companies.
Healthcare companies and banks rose as major companies including UnitedHealth and JPMorgan Chase announced their fourth-quarter results.
The British pound wobbled after legislators soundly rejected Prime Minister Theresa May's plan governing the country's departure from the European Union. Although the deal's defeat might herald more chaos for companies in Britain and Europe in the months ahead, the vote’s outcome was long expected and stocks didn't react much.
Investors were encouraged to see China make moves to stimulate growth. China is enduring its worst slowdown since the global financial crisis amid a trade war with the United States.
Tuesday’s moves show “clear signs [Chinese officials] are worried about the economy,” said Lindsey Bell, an investment strategist at CFRA. But to investors who want China's economy to pick up again, Bell said, the latest steps were “really welcome news.”
The Standard & Poor’s 500 index climbed 27.69 points, or 1.1%, to 2,610.30, its first close above 2,600 since Dec. 13. The Dow Jones industrial average rose 155.75 points, or 0.7%, to 24,065.59.
The technology-heavy Nasdaq composite jumped 117.92 points, or 1.7%, to 7,023.83. The Russell 2000 index of small-company stocks rose 12.40 points, or 0.9%, to 1,445.22.
Chinese leaders plan to reduce taxes, increase government spending and provide financing to private and small enterprises in a bid to strengthen the world's second-largest economy.
That helped tech companies, which make big chunks of their sales in China. Microsoft rose 2.9% to $105.01. Broadcom climbed 2.2% to $256.49.
Hong Kong's Hang Seng rebounded 2%, wiping out its Monday loss. It has climbed this month but is still down almost 19% from its January 2018 peak.
Japan's Nikkei 225 index, reopening after a market holiday, rose 1%. The Kospi in South Korea rose 1.6%.
Netflix climbed 6.5% to $354.64 after announcing price increases for all its U.S. streaming customers. That touched off strong gains for the other “FAANG” stocks: Facebook rose 2.4% to $148.95, Amazon climbed 3.5% to $1,674.56, Apple rose 2% to $153.07, and Google parent Alphabet climbed 3.3% to $1,086.51.
Netflix shares have jumped 32.5% in 2019 but were worth almost $420 a share in July.
In Britain, the House of Commons broadly rejected the deal May negotiated with EU leaders. Britain is scheduled to leave the EU on March 29 after, in a June 2016 referendum, a narrow majority of U.K. subjects voted for that to happen. It's not clear what will happen to May's government, which faces a vote of no confidence, or to the economies and financial systems of Britain and the rest of Europe.
The pound fell as low as $1.2670 before the vote and later traded at $1.2834, down from $1.2865 late Monday. The British FTSE 100 index closed up 0.6%, but banks including Lloyd's and Royal Bank of Scotland slipped.
Bell, the CFRA investment strategist, noted that British stocks have continued to rise since the 2016 referendum because the global economy and company profits kept growing.
“The market has taken it in stride,” she said. “Maybe when we get closer to March 29th, when they're officially done without a deal, you could see more volatility.”
The FTSE 100 is up 9% since the vote, not much different from the German DAX and French CAC 40, but other indexes including the S&P 500, the Hang Seng and the Nikkei 225 have done far better.
Delta Air Lines became one of the first companies to detail how the partial shutdown of the U.S. government is affecting its business. The airline said it's on pace to lose $25 million in revenue this month. Chief Executive Ed Bastian said the shutdown is keeping Delta from using new Airbus jets because the planes must be certified by safety regulators — who have been furloughed since Dec. 22 in the longest U.S. government shutdown of all time.
Meanwhile, an unusually high number of airport screeners have been missing work after they did not get paychecks last week, contributing to long lines at some airports.
Delta’s fourth-quarter results met Wall Street's expectations. Its stock gyrated Tuesday and finished up 0.2% at $47.83.
Paint and coatings maker Sherwin-Williams fell 4.1% to $381.44 after it said it was “disappointed” with its October and November sales and posted fourth-quarter profit and sales that fell short of Wall Street's estimates. Other coatings makers sank too. Home improvement retailer Home Depot fell 1.3% to $176.47, and Lowe's slid 2.1% to $94.91.
Oil prices rose as investors felt a bit better about China's economic growth. Benchmark U.S. crude climbed 3.2% to $52.11 a barrel in New York. Brent crude, the international standard, climbed 2.8% to $60.64 a barrel in London.
Wholesale gasoline rose 3.5% to $1.41 a gallon. Heating oil rose 1.1% to $1.87 a gallon. Natural gas fell 2.5% to $3.50 per 1,000 cubic feet.
Gold slipped 0.2% to $1,288.40 an ounce. Silver fell 0.4% to $15.62 an ounce. Copper was flat at $2.63 a pound.
Bond prices inched down. The yield on the 10-year Treasury note rose to 2.72% from 2.71%.