U.S. stocks are broadly higher, but have given up a chunk of their early gains after British legislators soundly rejected Prime Minister Theresa May’s plan governing the country’s departure from the European Union and more in Tuesday’s Stock Market Update.
Netflix leads a rally in internet and technology companies after saying it will raise prices for its subscription plans in the U.S. China’s also government said it plans to cut taxes, a step that could generate more business for tech companies. Health care companies and banks rose as major companies including UnitedHealth and JPMorgan Chase announced their fourth-quarter results.
STOCK MARKET UPDATE
KEEPING SCORE: The S&P 500 index rose 27 points, or 1.1 percent, to 2,610 at closing time. It climbed as much as 1.2 percent earlier and hasn’t closed at 2,600 since Dec 13. The Dow Jones Industrial Average added 155 points, or 0.7 percent, to 24,065. The technology-heavy Nasdaq composite jumped 117 points, or 1.7 percent, to 7,023. The Russell 2000 index of smaller-company stocks gained 6 points, or 0.5 percent, to 1,439.
BRITAIN VOTE: The House of Commons rejected the deal May negotiated with EU leaders by a vote of 432-202. Britain is scheduled to leave the EU on March 29 after a June 2016 referendum where a narrow majority of UK subjects voted to take Britain out of the union. It’s not clear what will happen to May’s government, which faces a vote of no confidence, or the economies and financial systems of Britain and the rest of Europe.
The pound dipped as low as $1.2670 ahead of the vote and later traded at $1.2820, from $1.2865 late Monday. The British FTSE 100 index closed up 0.6 percent. It’s down 11 percent over the last year.
British banks mostly fell. Barclays lost 1.3 percent to $8.15 and Lloyd’s shed 2.1 percent to $2.81.
Lindsey Bell, investment strategist at CFRA, noted that British stocks have continued to rise since the 2016 referendum because the global economy and company profits kept growing.
“The market has taken it in stride,” she said. “Maybe when we get closer to March 29th, when they’re officially done without a deal, you could see more volatility then.”
BANDER-SNATCHING MORE DOLLARS: Netflix announced the biggest price increase in its history. The price of its most popular video-streaming plan will rise $13 per month from $11. That will help to pay for Netflix’s huge investment in original shows and films and finance the heavy debt it has assumed to ward off rivals such as Amazon, Disney and AT&T. Its stock climbed 6.1 percent to $353.39. Netflix stock has jumped 32 percent in 2019 but was worth almost $420 a share in July.
Companies including Facebook and Alphabet, Google’s parent company, rallied as well.
CHINA’S ECONOMY: Chinese leaders plan to slash taxes, increase government spending, and provide financing to private and small enterprises in a bid to strengthen the world’s second-largest economy. China is enduring its worst slowdown since the global financial crisis amid a punishing tariffs dispute with the U.S.
“It shows clear signs they are worried about the economy,” said Bell. But to investors, who want China’s economy to pick up again, the latest steps were “really welcome news,” she said.
That helped tech companies, which make big chunks of their sales in China. Microsoft rose 2.3 percent to $104.39 and Broadcom climbed 2.7 percent to $257.54.
Hong Kong’s Hang Seng rebounded 2 percent, wiping out a loss on Monday. It’s moved higher this month but is still down almost 19 percent from its peak in late January 2018.
Japan’s Nikkei 225 index, reopening after a market holiday, added 1 percent. The Kospi in South Korea jumped 1.6 percent.
PAINT IT BLACK: Paint and coatings maker Sherwin-Williams said it was “disappointed” with its sales in October and November, and its profit and sales in the fourth quarter fell short of Wall Street’s estimates. Its stock fell 4.2 percent to $381.08. Other coatings makers also struggled, as PPG Industries skidded 1.2 percent to $100.71. Home improvement retailer Home Depot gave up 1.3 percent to $176.46 and Lowe’s slid 2.3 percent to $94.69.
AIR SICK: Delta Air Lines became one of the first companies to detail how the partial shutdown of the federal government is affect its business. The airline says it’s on pace to lose $25 million in revenue this month. CEO Ed Bastian said the shutdown is keeping Delta from using new Airbus jets because the planes must be certified by safety regulators. They have been furloughed since Dec. 22 in the longest U.S. government shutdown ever.
An unusually high number of airport screeners have been missing work after they did not get paychecks last week, contributing to long lines at some airports.
Delta stock gyrated and was up 0.1 percent at $47.78 in afternoon trading.
ENERGY: Oil prices rose as investors felt a bit better about China’s economic growth. Benchmark U.S. crude added 3.2 percent to $52.11 a barrel in New York. The international standard, Brent crude, gained 2.8 percent to $60.64 a barrel in London.
BONDS: Bond prices were little changed after an early gain. The yield on the 10-year Treasury remained at 2.71 percent.
EUROPE: Germany’s DAX edged 0.3 percent higher and the CAC 40 in France picked up 0.5 percent.
CURRENCIES: The dollar rose to 108.63 yen from 108.20 yen. The euro dipped to $1.1387 from $1.1465.
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