U.S. stocks rallied to their highest level in more than a month Tuesday after China’s government moved to inject more life into its economy by cutting taxes and increasing spending. Netflix led a surge in high-tech companies.
Health care 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. While the deal’s defeat might herald more chaos for companies in Britain and Europe in the months ahead, the outcome of the vote was long expected and stocks didn’t react much.
Investors were encouraged to see China makes moves to stimulate growth. China is enduring its worst slowdown since the global financial crisis amid a punishing tariffs dispute with the U.S.
“It shows clear signs they 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 S&P 500 index rose 27.69 points, or 1.1 percent, to 2,610.30, its first close above 2,600 since Dec 13. The Dow Jones Industrial Average added 155.75 points, or 0.7 percent, to 24,065.59.
The technology-heavy Nasdaq composite jumped 117.92 points, or 1.7 percent, to 7,023.83.
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. China is enduring its worst slowdown since the global financial crisis, partly because of a punishing tariff dispute with the U.S.
That helped tech companies, which make big chunks of their sales in China. Microsoft rose 2.9 percent to $105.01 and Broadcom climbed 2.2 percent to $256.49.
Hong Kong’s Hang Seng rebounded 2 percent, wiping out a loss on Monday. It’s moved higher this month but is still down almost 19 percent from its peak in late January 2018.
Japan’s Nikkei 225 index, reopening after a market holiday, added 1 percent. The Kospi in South Korea jumped 1.6 percent.
Netflix announced the biggest price increase in its history to help to pay for a huge investment in original content and finance the heavy debt it has assumed to ward off rivals such as Amazon, Disney and AT&T.
Netflix climbed 6.5 percent to $354.75. That touched off strong gains for the other “FANG” stocks: Facebook rose 2.4 percent to $148.95, Amazon gained 3.5 percent to $1,674.56, and Google’s parent company Alphabet jumped 3.3 percent to $1,086.51.
Netflix has jumped 32.5 percent in 2019 but was worth almost $420 a share in July.
In Britain, the House of Commons rejected the deal May negotiated with EU leaders by a vote of 432-202. The country is scheduled to leave the EU on March 29 after a June 2016 referendum where a narrow majority of UK subjects voted to take Britain out of the union. It’s not clear what will happen to May’s government, which faces a vote of no confidence, or the economies and financial systems of Britain and the rest of Europe.
The pound dipped as low as $1.2670 ahead of the vote and later traded at $1.2834, down from $1.2865 late Monday. The British FTSE 100 index closed up 0.6 percent, 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 percent 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 federal government is affecting its business. The airline says it’s on pace to lose $25 million in revenue this month. CEO Ed Bastian said the shutdown is keeping Delta from using new Airbus jets because the planes must be certified by safety regulators. They have been furloughed since Dec. 22 in the longest U.S. government shutdown of all time.
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 met Wall Street’s expectations in the fourth quarter. Its stock gyrated and finished with a gain of 0.2 percent at $47.83.
Paint and coatings maker Sherwin-Williams said it was “disappointed” with its sales in October and November, and its profit and sales in the fourth quarter fell short of Wall Street’s estimates. Its stock fell 4.1 percent to $381.44. Other coatings makers sank, and home improvement retailer Home Depot gave up 1.3 percent to $176.47 while Lowe’s slid 2.1 percent to $94.91.
Oil prices rose as investors felt a bit better about China’s economic growth. Benchmark U.S. crude added 3.2 percent to $52.11 a barrel in New York. The international standard, Brent crude, gained 2.8 percent to $60.64 a barrel in London.
Wholesale gasoline jumped 3.5 percent to $1.41 a gallon. Heating oil rose 1.1 percent to $1.87 a gallon and natural gas fell 2.5 percent to $3.50 per 1,000 cubic feet.
Gold slipped 0.2 percent to $1,288.40 an ounce and silver fell 0.4 percent to $15.62 an ounce. Copper was unchanged at $2.63 a pound.
Bond prices inched lower. The yield on the 10-year Treasury note rose to 2.72 percent from 2.71 percent.
In Europe, the DAX edged 0.3 percent higher and the CAC 40 in picked up 0.5 percent.
The dollar rose to 108.57 yen from 108.20 yen. The euro dipped to $1.1402 from $1.1465.