By Medha Singh
(Reuters) – The S&P 500 and Nasdaq scaled record highs on Wednesday as results from retailers Target and Lowe’s trounced estimates, a day after the S&P 500 completed its fastest recovery ever from a bear market.
Big-box chain Target Corp jumped 9.5% after posting its best quarterly comparable sales growth and online revenue that nearly tripled.
Home improvement chain Lowe’s Companies Inc rose 1.4% after beating estimates for quarterly same-store sales as it benefited from a surge in demand for its products from consumers stuck indoors.
Lowe’s larger rival Home Depot Inc and retail behemoth Walmart Inc reported similar results on Tuesday.
However, the broader S&P 500 retailing index fell 0.4%, dragged down by a 0.9% fall in Amazon.com Inc.
“These earnings are reflecting the reopening of the economy and the stimulus cheques,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“This quarter might be a different story, unless you get stimulus cheques to come within the next few weeks, but that doesn’t seem feasible at this time.”
Hopes for another round of fiscal coronavirus aid, after enhanced unemployment benefits expired last month, have been driving U.S. stocks higher. But Democrats and Republicans remain divided on key issues of the bill.
The S&P 500 closed at a record high on Tuesday, completing a recovery from a dramatic pandemic-led sell-off. The Dow is still nearly 5% below February’s record closing high.
“Either you read this as a sign that the market could go a lot higher as we enter a cyclical bull market with lots of cash sitting on the sidelines still to pour into value,” said Neil Wilson, chief market analyst at Markets.com in London.
“Or you worry that this is a Fed-fueled tech bubble with forward earnings multiples looking enormously stretched.”
The technology sector provided the biggest boost to the benchmark index on Wednesday.
While trillions of dollars in fiscal and monetary support and a rally in tech-related shares have helped the benchmark surge about 55% from its March lows, the country’s battered economy is still far from the pre-pandemic levels.
Minutes from Federal Reserve’s meeting, set for release at 2 p.m. ET (1800 GMT), could offer clues into the central bank’s plans for September.
At 9:45 a.m. ET, the Dow Jones Industrial Average was up 98.69 points, or 0.36%, at 27,876.76, the S&P 500 was up 4.75 points, or 0.14%, at 3,394.53. The Nasdaq Composite was down 8.64 points, or 0.08%, at 11,202.21.
Johnson & Johnson said it would buy Momenta Pharmaceuticals Inc for about $6.5 billion in cash to bolster its portfolio of treatments for autoimmune diseases. Shares of Momenta soared 69%.
Gilead Sciences Inc fell 2.5% after the U.S. Food and Drug Administration refused to approve its experimental treatment for rheumatoid arthritis in its current form.
Advancing issues outnumbered decliners by a 1.27-to-1 ratio on the NYSE and by a 1.28-to-1 ratio on the Nasdaq.
The S&P index recorded 17 new 52-week highs and no new low, while the Nasdaq recorded 41 new highs and three new lows.
(Reporting by Medha Singh and Ambar Warrick in Bengaluru; editing by Uttaresh.V and Vinay Dwivedi)
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