Technology stocks drive early gains as latest earnings flow

Big technology companies pushed U.S. stocks higher in early trading as investors reviewed the latest earnings reports and updates on rising inflation.

Banks and airlines showed more signs of recovery from the virus pandemic, which hit those sectors particularly hard. Investors are looking closely at the latest round of earnings for confirmation about the scale and pace of the economic recovery as people return to work, travel again and generally try to get back to some semblance of normal following the worst of the virus pandemic.

The S&P 500 rose 0.4% as of 10:20 a.m. Eastern. The Dow Jones Industrial Average rose 104 points, or 0.3 to 34,997 points and the Nasdaq rose 0.6%.

Technology stocks were the biggest gainers in the benchmark S&P 500 as bond yields fell after rising the day before. The yield on the 10-year Treasury fell to 1.36% from 1.41% late Tuesday. Lower yields tend to make it easier for investors to justify the relatively high prices of tech stocks, which have risen sharply on expectations of earnings growth well into the future.

The lower yields also weighed on banks after several of them reported mostly solid financial results. Banks rely on higher bond yields to charge more lucrative interest rates on loans.

Citigroup jumped 2.3% after reporting a more than five-fold rise in profits, helped by an improving economy that resulted in fewer bad loans on the bank’s balance sheet. Wells Fargo rose 0.8% after reporting its most profitable quarter in two years and easily beating Wall Street forecasts.

Mixed results from Bank of America disappointed investors, though. It fell 3% after reporting solid profits, but weak revenue.

Airlines showed more signs of recovery as people begin to resume travel for work and leisure. American Airlines jumped 6.4% after giving investors an encouraging update on its second-quarter financial picture. United Airlines rose 1.6%.

Outside of earnings, investors are still closely watching measures of inflation to better gauge how it could impact the recovery. Inflation at the wholesale level jumped 1% in June, pushing price gains over the past 12 months up by a record 7.3%. The news on wholesale prices followed a report Tuesday that consumer prices increased in June by 0.9% and were up 5.4% over the past 12 months, the biggest 12-month gain in 13 years.