U.S. stocks rose on Tuesday as Netflix led a rally in tech-related names after news that it would hike its monthly membership prices. The Dow Jones Industrial Average rose 155.75 points to 24,065.59 as Microsoft and UnitedHealth outperformed.
The S&P 500 gained 1.07 percent to close at 2,610.30 as the tech sector climbed 1.5 percent. Tuesday was also the first time since December that the S&P 500 closed above 2,600, a key level watched by traders. The Nasdaq Composite outperformed, rising 1.7 percent to 7,023.83.
Stocks pared some of their gains after U.K. lawmakers voted against the Brexit plans of U.K. Prime Minister Theresa May, worrying investors that global economic growth could take a hit as a result.
Shares of Netflix jumped 6.5 percent after a report said the company it would hike prices to its monthly memberships by 13 to 18 percent. This would be Netflix’s biggest price hike since it launched its streaming service more than a decade ago.
“Investors will likely view this above-Street estimate increase quite positively, bolstering confidence in subscriber trends, pace of revenue growth and ability to achieve guidance for margin gains,” said Doug Mitchelson, an analyst at Credit Suisse.
Facebook, Amazon, Apple, and Alphabet rose more than 2 percent each.
The major averages also got a boost as J.P. Morgan Chase rose nearly 1 percent, erasing earlier losses. The stock initially fell after the banking giant reported lower-than-expected profit for the fourth quarter. The miss was J.P. Morgan’s first in 15 quarters.
Wells Fargo, meanwhile, posted earnings that topped expectations. Its sales, however, fell short of estimates. The bank also said it will operate under the Federal Reserve’s growth cap for longer than expected. Other banks, including Bank of America, Goldman Sachs and Morgan Stanley are scheduled to report quarterly earnings later this week.
Investors came into this earnings season jittery after a massive sell-off in December led analysts to trim their earnings estimates for the previous quarter as well as 2019.
“It’s now fair to say that downward revisions to 2019 S&P 500 EPS growth estimates have been a little worse than usual,” Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, said in a note. “The magnitude of the downward revision is now tracking a little bit worse than the median and average downward revision that occurred from 2000 to 2017. ”
So far, only 4.75 percent of S&P 500 companies have posted calendar fourth-quarter earnings. Of those companies, 87.5 percent have topped expectations. But worries around earnings were somewhat quelled amid positive news from Netflix and out of China.
The Dow briefly traded lower earlier in the day amid worries about U.S.-China trade. Sen. Chuck Grassley said Tuesday that U.S. Trade Representative Robert Lighthizer saw little progress in last week’s talks with China. The Dow briefly turned negative on Grassley’s comments before The two countries are trying to strike a deal to end a trade war that started last year.
“The real wild card is the trade talks here,” said Mark Esposito, CEO of Esposito Securities. “I do think we’ll come to some commonality here during the earnings season. That’s the big uncertainty that’s still looming out there.”