U.S. stock-market indexes saw gains firm midday Monday, led by technology-related shares, as investors weighed optimism over a quick recovery for the domestic economy, or V-shaped rebound, against evidence of an acceleration of COVID-19 infections in several states and elsewhere in the world.
How are benchmarks performing?
The Dow Jones Industrial Average
was 144 points higher, or 0.6%, to around 26,017 but had been down by nearly 204 points at the start of Monday trade. The S&P 500
was up 20 points, or 0.6%, to 3,117, off its intraday low at 3,079.26, and powered by a 1.6% jump in information technology
The tech-heavy Nasdaq Composite
picked up 97 points, or 1%, to around 10,042, trading above its June 10 record closing high at 10,020.35.
On Friday, the Dow booked a weekly gain of 1%, the S&P 500 gained 1.9%, and the Nasdaq returned 3.7%.
What’s driving the market?
Cases of the disease caused by the novel strain of coronavirus picked up momentum as U.S. states and countries continued business reopening efforts over the weekend. That could prompt local governments to reinstitute restrictions on social activities, or stall plans to ease lockdown measures further.
“Significant business and economic risks remain as long as the health risk is unmanaged. In many U.S. states, COVID-19 case rates are rising, and [economic data] could quickly reverse if lockdowns are renewed or anxious individuals stay at home,” said Lauren Goodwin, economist and multiasset portfolio strategist at New York Life Investments, in a note.
The World Health Organization on Sunday reported the largest single-day increase in cases, more than 183,000, in COVID-19, while South Korea on Monday declared its resurgence of the deadly virus a “second wave.”
Domestically, there are 24 states that showed an increasing trend in cases this past week, with California, Texas and Florida continuing to leading the way, each with more than 4,000 new cases on Sunday alone, according to data aggregated by Johns Hopkins University. The global tally for COVID-19 rose to just shy of 9 million, according to the day.
Overall, the U.S. continues to lead the world, with the case tally of 2.28 million and death toll of 119,977 more than double the next highest totals of 1.08 million cases and 50,591 deaths in Brazil.
Meanwhile, Germany’s rate of infection over a four-day average climbed on Sunday and India’s death toll rose by 445, its highest single-day tally, as the country reported 14,821 new cases, according to reports.
“There are clearly some concerns circulating, but they are nothing like the panic that was seen in February and March,” wrote David Madden, market analyst at CMC Markets UK, in a Monday research note.
Still, New York City is allowing companies to reopen their offices Monday after a three-month lockdown because of the pandemic.
White House trade adviser Peter Navarro said the Trump administration is preparing for a second wave, but isn’t anticipating one. “We don’t necessarily expect a second wave but prudence dictates that we plan for it. There is no contradiction,” he told CNN’s Jake Tapper on CNN’s “State of the Union” on Sunday.
A number of strategists, however, are betting that the economy, will stage a sharp rebound out of recession, even as infections pick up. “History is not on the side of investors expecting anything less than a V-shape,” wrote analysts at Jefferies, led by Sean Darby, global equity strategist, in a research note, who is anticipating improvement in earnings as manufacturing data steadies from coronavirus lows.
Looking ahead, the Federal Reserve will release the results of its annual stress tests on the nation’s largest banks next Thursday. The Fed has conducted stress tests on the biggest banks every year since 2009 and this year is particularly important in the wake of the coronavirus pandemic.
In economic data, the Chicago Fed’s national activity index rebounded to a reading of 2.61 in May from a revised minus 17.89 in April. A number above a zero value for the index, which is a weighted average of 85 economic indicators, indicates that the national economy is expanding at its historical trend rate of growth. Negative values indicate below-average growth.
Which stocks are in focus?
- Nike Inc.
and Microsoft Corp
shares led the Dow higher at midday, up 2.7% AMD 2.3%, respectively.
- Shares of Apple Inc.
are in focus the iPhone maker this week holds the first-ever virtual version of its Worldwide Developers Conference, an annual event that began in 1987. This year’s edition kicks off at 10 a.m. Pacific time. Its shares were up 2.2%.
- American Airlines Group’s stock
tumbled 6.5% after the air carrier announced Sunday that it would raise $3.5 billion in new financing.
- Tripadvisor Inc.
said Monday that it expects June revenue to be about 20% of last year’s comparable period total. The stock was down 3.7%.
- Bed Bath & Beyond Inc.
said it added a $850 million credit facility, and that it expected .nearly all stores to reopen by July. The stock was up 2%.
- Shares of Biogen Inc.
fell on Monday, after Barclays downgraded the biotech, arguing that investors are right to be concerned after courts last week dealt a blow to the patent on its most valuable drug, Tecfidera, raising the prospects for generic competitors to the multiple-sclerosis drug. Shares were down 2%.
- Shares of Alphabet Inc.
were in focus after Google’s ad revenue was projected to fall in 2020, according to eMarketer.
- Shares of Sonos Inc.
are up after Citron Research chimed in with a bullish view of the smart-speaker company.
- Nikola Corp.
is “poised to disrupt the transportation industry,” analysts at J.P. Morgan said in a note Monday.
How are other markets trading?
West Texas Intermediate U.S. crude
erased its losses, and was trading up 28 cents, or 0.7%, to $40.03 a barrel. In precious metals, gold futures for August
gained $15.50, or 0.9%, to $1,768 an ounce, on the New York Mercantile Exchange, near its highest level since 2012.
The greenback was down 0.6% against basket of its major rivals, based on trading in the ICE U.S. Dollar Index.
In global equities, the Stoxx Europe 600 index
was down 0.8%, while the FTSE 100 index
also fell 0.8%. In Asia markets, China’s benchmark CSI 300 index
gained 0.1%, and the Japanese Nikkei
closed 0.2% lower.
Published at Mon, 22 Jun 2020 16:58:32 +0000-Market Snapshot: Dow reclaims perch above 26,000 as tech-related stocks rally amid rise in coronavirus cases