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published on February 5, 2020 - 1:22 PM
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Health care and financial companies led a broad rally on Wall Street Wednesday, giving the market its third straight gain. The S&P 500 and the Nasdaq closed at all-time highs. The latest gains came as another batch of solid corporate earnings reports and more encouraging economic data overshadowed concerns about economic fallout from the virus outbreak that originated in China. Bond prices fell, pushing yields higher. Crude oil prices jumped. The S&P 500 rose 37 points, or 1.1%, to 3,334. The Dow Jones Industrial Average rose 483 points, or 1.7%, to 29,290 and the Nasdaq climbed 40 points, or 0.4%, to 9,508.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
Health care and financial companies led a broad rally on Wall Street Wednesday, placing the major stock indexes on track for a third straight day of gains.

The Dow Jones Industrial Average climbed more than 450 points and the S&P 500 index was within strking distance of an all-time high.

The latest gains came as another batch of solid corporate earnings reports and encouraging economic data overshadowed concerns about the potential economic fallout from the virus outbreak that originated in China.

The latest jobs survey by payroll processor ADP indicated hiring accelerated better than expected last month. A separate report showed economic activity increased in January.

“The earnings numbers that we’ve gotten for the most part have been pretty solid, and the ADP report was a blowout on the good side,” said Scott Ladner, chief investment officer for Horizon Investments.

That’s the kind of reaction you get when the market is looking and saying ‘we think maybe this hiccup in growth that we thought may have been there because of the coronavirus or presidential election, maybe we took that a little too far.

Versace parent Capri Holdings jumped 8.6% and CoverGirl owner Coty jumped 13.1% for some of the strongest gains as Wall Street rewarded their results, which easily beat analysts’ forecasts.

Health care companies made solid gains. Insurance giant UnitedHealth Group and drug developer Amgen were standouts.

Crude oil prices jumped 2.3% and lifted energy stocks. Exxon Mobil gained 4.5%.

Communication services and real estate stocks were the only decliners.
Investors shifted away from safe-play holdings as they took on more risk.

The yield on the 10-year Treasury rose to 1.65% from 1.60% late Tuesday.

Utilities and real estate companies lagged the market.

KEEPING SCORE: The S&P 500 index rose 1.1% as of 3:31 p.m. Eastern time. The Dow rose 478 points, or 1.7%, to 29,286. The Nasdaq rose 0.4%. The Russell 2000 index of smaller company stocks rose 1.5%.

Markets in Europe and Asia closed higher.

VIRUS UPDATE: The recent virus outbreak has infected more than 24,500 people globally, but has been mostly confined to China. The world’s second largest company remains on lockdown and companies continue to warn of an expected impact to revenue and profit, though the extent of the damage for many remains unclear. Tesla plunged 17.7% on reports that the shutdowns in China will delay production at its Shanghai factory. The company warned investors last week that production delays in China were possible.

ECONOMIC DATA: Payroll processor ADP said that private U.S. companies added 291,000 jobs in January, a big increase from December. The report came out ahead of the Labor Department’s release of its January jobs tally on Friday. Many analysts expect that report will show a job gain of 150,000 in January, compared to 145,000 jobs in the government’s report in December.

Meanwhile, the Institute for Supply Management said its index of business activity by service sector companies increased in January, an indicator of continued steady expansion of the economy.

SHRINKING MEDICINE CABINET: Merck fell 3.3% after the drug maker reported weak fourth-quarter revenue and said it will spin off some of its operations, including the women’s health division. In all, the pharmaceutical giant is looking to shed businesses that churn out $6.5 billion in annual revenue as it focuses on growth areas including cancer treatments, vaccines and veterinary drugs.

BUSTED TIRES: Ford slumped 9.5% after the automaker reported weak fourth-quarter earnings to cap off a disappointing year. The company’s profit plunged in 2019 because of slowing sales, the cost of a botched SUV launch and some big pension expenses. It also gave investors a weak profit forecast for 2020.

SHRINKING DEPARTMENT: Macy’s climbed 5.6% after the department store giant said it will cut 2,000 corporate jobs and close 125 of its least productive stores. The store closures represent about one fifth of Macy’s current total. Macy’s, like its peers Nordstrom and J.C. Penney, is dealing with stiffer competition and shoppers’ changing behavior to online and discount shopping.


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