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(Reuters) – Wall Street’s main indexes rose on Tuesday after upbeat earnings from big U.S. banks and Halliburton (NYSE:HAL), while investors awaited a speech from U.S. Treasury Secretary nominee Janet Yellen that is expected to advocate hefty fiscal spending.
Shares of Goldman Sachs Group Inc (NYSE:GS) added 1.6% as its fourth-quarter profit more than doubled, dwarfing estimates after another blowout performance at its trading and underwriting business.
Bank of America (NYSE:BAC) also topped fourth-quarter profit estimates and joined JPMorgan (NYSE:JPM), Citigroup Inc (NYSE:C) and Wells Fargo (NYSE:WFC) & Co in releasing some cash reserves to cover for coronavirus-driven loan losses, underscoring its confidence in the economy.
Its shares, however, dropped 1.2% after a sharp climb over the last two weeks. The S&P 500 banks index rose 0.6%.
“The bank earnings is coming in better than expected and we see investors respond favorably to the numbers,” said Sam Stovall, chief investment strategist at CFRA Research.
Earnings for S&P 500 companies are likely to decline 7.8% in the fourth quarter of 2020 from a year ago, but are expected to rebound in 2021, with a gain of 16.7% forecast for the first quarter, according to IBES data from Refinitiv.
Wall Street’s main indexes dropped on Friday as investors booked profits after a recent rally to record highs on hopes of a speedy economic recovery fueled by a hefty fiscal stimulus package and vaccine distribution.
Yellen is set to testify to the Senate Finance Committee, starting at 10 a.m. ET (1500 GMT), that the government must “act big” with its next coronavirus aid plan.
President-elect Joe Biden, who will be sworn into office on Wednesday, outlined a $1.9 trillion stimulus package proposal last week to jump-start the economy.
“Yellen did encourage that the U.S. should act on this coronavirus relief bill. It seems it’s the kind of package that Wall Street is concluding will likely to pass both houses of the Congress and therefore be put in to work pretty quickly,” Stovall added.
Eight of 11 S&P sectors advanced in early trading with technology providing the biggest boost to the benchmark S&P 500. Defensive utilities, consumer staples and real estate sectors were in the red.
At 9:32 a.m. ET, the Dow Jones Industrial Average rose 227.19 points, or 0.74%, to 31,041.45, the S&P 500 gained 29.87 points, or 0.79%, to 3,798.12 and the Nasdaq Composite gained 133.96 points, or 1.03%, to 13,132.46.
Tesla (NASDAQ:TSLA) Inc gained 1.6% after Jefferies (NYSE:JEF) raised its earnings estimates ahead of the electric-car makers’ fourth-quarter results next week.
Boeing (NYSE:BA) Co added 1.5% as Canada said it would lift a near two-year flight ban on its 737 MAX following two fatal crashes involving the model while a final clearance from Europe to resume flying the jet is expected next week.
Halliburton Co rose 2.7% after it posted a better-than-expected fourth-quarter profit, buoyed by cost cuts and a recovery in demand for oilfield equipment and services after last year’s industry slump.
Advancing issues outnumbered decliners by a 3.7-to-1 ratio on the NYSE and by a 4.7-to-1 ratio on the Nasdaq.
The S&P 500 posted 16 new 52-week highs and no new low, while the Nasdaq recorded 184 new highs and three new lows.
