Wonderful world of Disney earnings surprise boosts Wall Street

NEW YORK (Reuters) – U.S. stocks climbed on Wednesday on the heels of a surprise quarterly profit from Disney and as investors stayed optimistic that a deal was near for a U.S. coronavirus fiscal aid package.

Walt Disney Co’s (DIS.N) shares jumped 8.80%, to put it among the biggest boosts to the S&P 500 and Dow. The stock notched its biggest daily percentage gain since March 24 as revenue declines for Disney parks and media networks were not as bad as feared.

“That is helping the Dow and that has been a laggard versus the S&P this year, but it is more than that,” said Willie Delwiche, investment strategist at Baird in Milwaukee. “At a time when everyone is talking about how big and how important these megacaps are to the S&P, kind of quietly you are starting to see a little bit of a leadership rotation.”

The Dow Jones Industrial Average .DJI rose 373.05 points, or 1.39%, to 27,201.52, the S&P 500 .SPX gained 21.26 points, or 0.64%, to 3,327.77 and the Nasdaq Composite .IXIC added 57.23 points, or 0.52%, to 10,998.40.

Square Inc (SQ.N) surged 7.10% after the payments processor reported a 64% rise in second-quarter revenue, as consumers increased online buying and used its peer-to-peer Cash App platform during the pandemic.

As quarterly results have come in better-than-feared and heavyweight technology and technology-related companies have surged, a heavy dose of fiscal and monetary stimulus have helped fuel a rally in equities to bring the S&P 500 to less than 2% from its closing record on Feb. 19.

With 384 companies in the S&P having reported earnings through Wednesday morning, results are coming in 23.5% above expectations, in aggregate, according to Refinitiv data, the highest on record back to 1994.

Economic data painted a mixed picture, as U.S. services industry activity gained momentum in July, according to an ISM survey, with new orders jumping to a record high. However, hiring declined, supporting views that a recovery in the labor market was faltering.

Earlier, the ADP National Employment Report, which can be an inconsistent precursor to the government payrolls report set for Friday, showed U.S. private employers hired far fewer workers than expected last month.

“We know we had this tremendous rebound off the lows but what we need now is sustained strength,” said Delwiche.

Friday is being viewed as a deadline by one of the lead negotiators for the White House and some Senate Republicans in talks with congressional Democrats on a fresh round of coronavirus aid, or talks will be scrapped.

Financials .SPSY, industrials .SPLRCI and materials .SPLRCM, that track economic growth, outperformed among the major S&P sectors.

Teladoc Health Inc (TDOC.N) fell 19.01% after agreeing to buy chronic care provider Livongo Health Inc (LVGO.O) in a deal valuing the company at $18.5 billion, betting on a boom in online care and consultations spurred by the coronavirus crisis. Livongo shares fell 11.40%.

Electric truck maker Nikola Corp NKLA.O slumped 9.81% after it reported a bigger quarterly loss in its first results as a listed entity.

Advancing issues outnumbered declining ones on the NYSE by a 2.47-to-1 ratio; on Nasdaq, a 2.14-to-1 ratio favored advancers.

The S&P 500 posted 50 new 52-week highs and no new lows; the Nasdaq Composite recorded 208 new highs and 10 new lows.

About 10.09 billion shares changed hands in U.S. exchanges, compared with the 10.43 billion daily average over the last 20 sessions.

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