Strong earnings continue to push U.S. stocks higher

On Wednesday, U.S. stocks continued to rise across the board, led by cyclical stocks, with the Russell 2000 small index performing the best.

A series of strong earnings soothed investors' concerns about the economic outlook. Companies such as KO, CMG, and UAL reported impressive earnings, all stating that the increase in coronavirus infections has not affected their business. The 10-year treasury rate continued to rise, and the long-term interest rate gap widened, pushing up the financial sector.. Despite the recent weakness in cyclical stocks, strategists at J.P. Morgan and UBS both advise clients to invest in the sector, arguing that the economic recovery is just getting started.

Since many companies were hit hard by the pandemic in the second quarter of 2020, the market expects that the company's profit growth may be as high as 70% in the second quarter of this year, reaching the peak of this expansion cycle. Especially the profits of economically sensitive companies may have the largest increase in decades. The market will pay more attention to the company's future earnings outlook. 85% of S&P 500 companies that have reported earnings so far have over analysts' expectations.

     Market risk appetite continued to increase, with consumer staple, utilities, real estate trusts and other sectors all falling. Safe assets such as gold, U.S. Treasuries and the U.S. dollar were lower. The market breadth has further improved, but the volume are still weak.