U.S. stocks gained on Wednesday as data showing an expansion in services industry last month added to optimism stemming from Disney’s surprise quarterly profit and upbeat results from several healthcare companies.
A reading of ISM’s non-manufacturing activity index increased to 58.1 last month, the highest since March 2019, from 57.1 in June.
Walt Disney Co’s shares jumped 8.9% to hit a more than five-month high as revenue declines for its parks and media networks were not as bad as feared.
“Disney’s beat helped continue the market’s advance. In general, earnings have been coming in better-than-expected,” said Sam Stovall, chief investment strategist, CFRA Research in New York.
Drugstore operator and health insurer CVS Health Corp topped estimates for quarterly profit and raised its full-year forecast, while Humana Inc and drugmaker Regeneron Pharmaceuticals Inc also posted forecast-beating earnings.
Johnson & Johnson rose about 0.7% after it said the United States government would pay over $1 billion for 100 million doses of its investigational coronavirus vaccine.
Better-than-feared corporate results and a surge in shares of heavyweight technology companies have fueled a stimulus-driven rally in Wall Street’s main indexes, bringing the S&P 500 within 2.5% of its record high hit in February.
Earlier in the day, ADP National Employment Report showed private payrolls increased by 167,000 in July, far below economists expectations of 1.5 million additions. The ADP report is considered a precursor to the monthly jobs report on Friday.
Investors have been concerned about signs that the U.S. economic activity is stalling amid a surge in COVID-19 infections in parts of the country, strengthening the case for more fiscal aid.
White House negotiators on Tuesday vowed to work “around the clock” with congressional Democrats to try to reach a deal on coronavirus relief package by the end of this week.
Financials , industrials and materials stocks, that track economic growth, outperformed among major S&P sectors.
Energy sector rose the most as oil prices hit their highest since early-March.
At 10:15 a.m. ET, the Dow Jones Industrial Average was up 252.77 points, or 0.94%, at 27,081.24, the S&P 500 was up 19.19 points, or 0.58%, at 3,325.70. The Nasdaq Composite was up 39.58 points, or 0.36%, at 10,980.74.
Electric trucks maker Nikola Corporation slumped 10.1% after it reported a wider quarterly loss in its first results as a listed entity.
Advancing issues outnumbered decliners by a 2.57-to-1 ratio on the NYSE and by a 1.80-to-1 ratio on the Nasdaq.
The S&P index recorded 40 new 52-week highs and no new low, while the Nasdaq recorded 168 new highs and seven new lows.
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