US open: Stocks record early gains following sharp sell-off in previous session

Wall Street stocks were higher in early trading on Wednesday following a sharp sell-off in the previous session as market participants again bet on the reopening of the US economy.

As of 1525 GMT, the Dow Jones Industrial Average was up 1.04% at 32,759.29, while the S&P 500 was 0.73% firmer at 3,938.93 and the Nasdaq Composite started out the session 0.12% stronger at 13,243.33.

The Dow opened 336.14 points higher on Wednesday, erasing losses recorded in the previous session.

In focus ahead early on Wednesday, the yield on the benchmark 10-year Treasury note continued to slide, currently sitting well of recent highs at around 1.64%.

Rising Covid-19 cases across the globe were also in focus as multiple variants of the coronavirus continue to spread worldwide, with both Germany and France extending or enforcing new lockdown measures. However, giving some hope to traders was news that the pace of vaccinations in the US was continuing to accelerate, with nearly one in five adults now fully vaccinated.

On the macro front, durable goods orders decreased 1.1% in February after jumping 3.5% in January, according to the Commerce Department, dragged down by a 1.6% drop in orders for transportation equipment, which followed a 7.5% surge in January. Orders for non-defence capital goods excluding aircraft dropped 0.8% last month after gaining 0.6% a month earlier, while shipments of core capital goods dropped 1.0%.

Elsewhere, factory activity picked up in early March amid strong growth in new orders, according to IHS Markit, but supply chain disruptions stemming from the Covid-19 pandemic continued to create cost pressures for manufacturers, likely keeping inflation concerns at the forefront of investors' minds. IHS' manufacturing PMI increased to 59 during the first half of March, up from a final reading 58.6 for February, when activity took a hit from violently cold across much of the country.

On another note, Federal Reserve chairman Jerome Powell and Treasury Secretary Janet Yellen's testimonies in front of the House Committee on Financial Services continued at 1400 GMT. Yesterday, Powell and Yellen acknowledged richly valued asset prices in financial markets but assured that they were not concerned about stability.

“I'd say that while asset valuations are elevated by historical metrics, there's also belief that with vaccinations proceeding at a rapid pace, that the economy will be able to get back on track," Yellen said.

Powell added that the US economic recovery from the pandemic had "progressed more quickly than generally expected and looks to be strengthening". However, he cautioned that sectors of the economy hardest-hit by the Covid-19 pandemic "remain weak" and stated that the unemployment rate "underestimates the shortfall", meaning the economy's recovery still had some way to go.

In the corporate space, mobile home maker Winnebago reported record quarterly revenues of $839.9m, while General Mills fell short of earnings and announced the resumption of its share buyback programme.

The highly-touted and heavily-shorted GameStop reported solid quarterly earnings overnight but failed to really move the dial on its share price, while Robinhood said it has filed an IPO amid the ongoing GameStop controversy, marking what will likely be one of the most closely watched flotations in 2021.

Cruise and airline stocks recovered some of yesterday's losses, while energy stocks were also in the green amid a rebound in oil prices.