Stock Market Today: Alibaba Gains, Novavax Drops, and the Dow Rises

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The stock market was higher Wednesday, as investors weighed the prospect of strong corporate earnings against broader concerns over the economy.

In midday trading, the

Dow Jones Industrial Average
added 160 points, or 0.5%, while the

S&P 500
—which marked its fifth consecutive session of gains Tuesday—rose 0.4%. The

Nasdaq Composite
was up 0.2%.

Earnings season continued apace Wednesday, with

Abbott Laboratories

(ticker: ABT),

Verizon

(VZ),

Biogen

reporting Wednesday morning—they all beat—following

Netflix

(NFLX) and

United Airlines

(UAL) results Tuesday evening. One thing that stands out: With 16% of S&P 500 market cap having reported, results are nowhere near as good as bank earnings suggested last week, according to Credit Suisse strategist Jonathan Golub. While earnings have topped estimates by 14.1% overall, financials have topped forecasts by 21.6%, while everyone else has surpassed expectations by just 6.3%. It’s something to keep an eye on as earnings season progresses.

Wider concerns around familiar themes—such as inflation, central bank stimulus, and supply-chain disruptions—appear to have been allayed for now, as profit margins continue to hold up.

“Whilst inflation concerns are still very much bubbling under the surface of markets, risk appetite strengthened further yesterday thanks in no small part to decent earnings reports,” said Jim Reid, a strategist at Deutsche Bank. “There are no signs of widespread erosion of margins at the moment. Perhaps there is so much money sloshing about that for now prices are broadly being passed on.”

Still, bond yields now sit above 1.6% after trading over 1.65% on Tuesday, and that could pressure stocks. Higher bond yields typically weigh on technology companies in particular, because they tend to discount the present value of future cash flows, and the valuations of many tech companies are grounded in profits expected years in the future.

Tesla

(TSLA) and

IBM

(IBM) are among the companies releasing financial results in the day ahead.

Meanwhile,

Bitcoin
prices touched an all-time high above $66,000. The leading cryptocurrency has been buoyed by the launch of the first exchange-traded fund tracking regulated Bitcoin futures—a landmark moment for the crypto industry. 

Trading in the ProShares

Bitcoin Strategy ETF
(BITO) began Tuesday and most of the substantial volume was driven by high-frequency traders and retail investors, according to analyst Jeffrey Halley of broker Oanda.

“Although a regulated ETF based on regulated futures does fit nicely into the mandates of many in the institutional space, I suspect they may wait a while before dipping their toes in the water,” Halley said.

Here are eight stocks on the move Wednesday:

Novavax

(NVAX) dropped 11% following a report alleging that manufacturing problems jeopardize billions of Covid-19 vaccine doses set to be delivered to low- and middle-income countries.

Verizon gained 2.6% after the company reported better-than-expected earnings.

Netflix stock fell 1.2% despite reporting better-than-expected earnings after Tuesday’s close. The stock was downgraded to Hold from Buy at Deutsche Bank.

Alibaba

(BABA) stock rose 0.5% one day after gaining 6.1% on reports that it would make its own chips and that Jack Ma would be traveling to Europe.

The U.S.-listed shares of Dutch semiconductor equipment manufacturer

ASML

(ASML) fell 4.3% after the company outlined revenue guidance for the next quarter below Wall Street’s estimates.

Nestlé

(NESN.Switzerland) rose 3.3% in Zurich, as the food and drinks giant raised its full-year sales outlook after posting revenue ahead of analyst expectations—citing strong retail spending.

Deliveroo

(ROO.U.K.) rose 3.2% in London, as the food delivery company upgraded its full-year forecast after reporting strong order growth in the third quarter.

Kering

(KER.France) fell 4% in Paris, as the luxury-goods group, which owns brands including Gucci, saw sales growth held back in the crucial Asian-Pacific region by rising Covid-19 cases over the summer. But the company as a whole posted sales ahead of expectations.

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