The S&P 500 rose on Wednesday for a sixth day as investor sentiment was boosted by better-than-expected earnings reports and a new record for bitcoin.
The Dow Jones Industrial Average gained 100 points, or 0.02%. The S&P 500 added 0.2%. The Nasdaq Composite slipped by 0.05%.
Bitcoin rose as high as $66,299 Wednesday, a new all-time high for the cryptocurrency, following comments Paul Tudor Jones made on CNBC’s “Squawk Box” calling bitcoin his preferred inflation hedge over gold. Bitcoin has been climbing for four weeks amid positive regulatory developments and the anticipation of the first bitcoin-linked ETF, the ProShares Bitcoin Strategy ETF, which began trading Tuesday.
Fundstrat’s Tom Lee said bitcoin’s price rally is a signal of a strong risk-on environment and said the market could still rally more than 6% by the end of the year despite the “jagged year of progress” it’s had. He upped his S&P 500 price target 100 points to 4,800, citing declining Covid cases and economic resilience.
“We believe a strong risk-on environment is underway,” Lee said in a note to investors late Tuesday. “We do not think consensus is that bullish. We already know that investors got very pessimistic in September… However, the improvement in market technicals, such as clearing the 50-day moving average, is actually suggesting that underlying trends are getting stronger.”
Netflix posted its hotly-anticipated third-quarter earnings report on Tuesday after the market closed, with the streaming giant adding 4.4 million subscribers during the period. Wall Street analysts expected 3.84 million additions, according to estimates from StreetAccount. However, the shares, which are up 20% in the last three months, were down 2%.
Deutsche Bank downgraded Netflix after the report, saying its stock valuation was hard to justify with revenue growth set to slow next year. The firm also said strong fourth quarter subscriber additions are already baked into the stock.
United Airlines also posted quarterly results after the bell on Tuesday, with the company beating analyst expectations on the top and bottom line amid an ongoing rebound in travel demand. United shares were slightly lower Wednesday.
Biogen shares rose 2% after it beat estimates on earnings and revenue and raised its full year guidance. Verizon gained more than 2% after reporting strong earnings, though it missed revenue expectations slightly, and raised its forecast on 5G demand.
Ford shares up 2% after Credit Suisse upgraded the auto company on its EV shift and predicted a 30% rally in the stock.
More than 70 S&P 500 components report earnings this week. IBM, Tesla, CSX and Las Vegas Sands are among the names set to report after the market closes.
So far investors have largely cheered results from the batch of third-quarter earnings that have hit the market since the banks kicked things off last week. Of the S&P 500 components that have reported thus far, 82% have topped expectations, according to FactSet.
However, Jeff Buchbinder, equity strategist for LPL Financial, said investors shouldn’t expect the beats that companies posted as they emerged from the depths of the pandemic.
“We have used most of the superlatives we know to describe corporate America’s stunning performances over the past two earnings seasons,” he said. “We expect solid earnings gains during the upcoming third-quarter earnings season, but upside surprises will be smaller. Unfortunately, we won’t need as many superlatives.”
The S&P 500 added 0.74% on Tuesday, while the Nasdaq Composite advanced 0.71%. Both saw their fifth straight day of gains, the longest daily winning streak since late August.
The Dow advanced nearly 200 points, or 0.56%, for its third positive session in the last four days. Johnson & Johnson had the most positive impact on the 30-stock benchmark, while Procter & Gamble was the largest drag.
With stocks’ Tuesday advance, the major averages are approaching their all-time highs. The Dow is 0.49% below its record, while the S&P and Nasdaq Composite sit 0.58% and 1.78% below their highwater marks.
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