U.S. stock-indexes were mostly on the rise Tuesday afternoon, with investors turning to beaten-down energy and financial stocks amid a slate of corporate earnings reports, including quarterly results from Coca-Cola and Lockheed Martin.
Market sentiment also was upbeat on the promise of additional U.S. monetary stimulus, after the European Union forged a historic fiscal package, intended to dampen the economic impact of the effects of the COVID-19 pandemic.
The Dow Jones Industrial Average DJIA, +1.00% were up 296 points, or 1.1%, at 26,978, after hitting an intrasession peak at 27,025.38, powered by Chevron Corp. CVX, +6.73% and Boeing Co. BA, +2.68%. The S&P 500 index SPX, +0.65% was gaining 22 points, or 0.7%, at 3,274, with the energy sector SP500.10, +6.19% rising 7% and the financial sector SP500.10, +6.19% up 2.4%, leading the broad-market benchmark’s 11 sectors.
Meanwhile, the Nasdaq Composite Index COMP, +0.03% was bouncing around, and off 6 points, or 0.1%, at 10,760, at last check, after briefly touching an intraday record at 10,839.93 near Tuesday’s open.
On Monday, the Dow added 8.92 points, or less than 0.1%, to finish at 26,680.87. The S&P 500 SPX, +0.65% rose 27.11 points, or 0.8%, to end at 3,251.84, ending the session positive for 2020. The Nasdaq Composite surged 263.90 points, or 2.5%, to end at a record 10,767.09, booking its largest daily percent gain since April 29, according to Dow Jones Market Data. Monday’s all-time closing peak for the Nasdaq also represented its 28th of 2020.
What’s driving the market?
Investors looked eager to spread the love to other parts of the market after the technology-laden Nasdaq Composite on Monday delivered its 28th record close of 2020, with buyers scooping up down trodden shares in other areas of the market, including banks and oil-and-gas producers, which have been battered during the coronavirus pandemic.
Tuesday’s gains were helping to lift the S&P 500 out of a range that it has been trading since early June, experts said.
“The S&P 500 is breaking out of trading range,” said Crista Huff, founder of hedge fund Freedom Investment Partners, told MarketWatch. “We are beginning a bull run.” But “Clearly we have some massive problems in the economy and there are so many people that are unemployed and 10 or 20 million aren’t going to have an easy time finding a new job,” she added.
Corporate earnings still look pretty dire when considering the sharp hit many businesses have taken during the pandemic, although mostly better-than-feared.
“In the cyclical parts of the market, there was pessimism heading into earnings,” said Matt Stucky, equity portfolio manager at Northwestern Mutual Wealth Management, in an interview. But with growing optimism about potential coronavirus vaccines and therapeutics, as well as ongoing fiscal and monetary stimulus, Stucky sees a case to be made for downtrodden stocks that have yet to join the Nasdaq at record levels.
While the staying power of the pandemic is unknown, he expects the Federal Reserve and other global central banks to keep their feet “all the way down to the accelerator for awhile, which will permeate into equity prices.”
Early Tuesday, the EU reached an agreement on a €750 billion ($860 billion) coronavirus rescue fund after four days of intense negotiations among officials from the 27-nation bloc. The recovery package comprises €390 billion in grants and the remainder in loans as a part of a compromise with Denmark, Sweden, Austria and the Netherlands, which had been reluctant to push for a larger package of funds via grants. The leaders also agreed on a multiyear EU budget of over €1 trillion that will run from next year to 2027.
In the U.S., investors were awaiting developments on another fiscal stimulus plan by Congress as a $600 per-week federal unemployment package is set to expire at the end of the month. U.S. Senate Majority Leader Mitch McConnell and Treasury Secretary Steven Mnuchin were slated to discuss details for additional aid to Americans at the White House on Tuesday. Mnuchin has suggested that $1 trillion would represent a minimum amount in recovery funds, with Democrats supporting a package that exceeds $3 trillion.
The reports come as a number of corporations are reporting second-quarter results, including Coca-Cola Co. KO, +2.66%, which presented results that were better than expected early Tuesday.
The action on Wall Street comes as the global tally for confirmed cases of the coronavirus that causes COVID-19 climbed to 14.7 million on Tuesday, according to data aggregated by Johns Hopkins University, and the death toll rose to 610,292. The U.S. has the world’s highest death toll at 140,909, according to data aggregated by Johns Hopkins University.
See: Coronavirus update: U.S. case tally climbs above 3.8 million; President Trump appears to have changed his view on face masks
On the economic front, the Chicago Fed National Activity Index for June, a composite of 85 indicators, rose to a fresh record 4.11, marking a record high going back to 2000, from a 3.5 in May— representing a level that was raised from the previous May reading. A zero value for the index indicates the national economy is expanding at its historical trend rate of growth.The report highlights that some aspects of the economy are attempting to come off its coronavirus lows.
Vice President Joe Biden, meanwhile, was set to unveil this afternoon in Delaware a $775 billion plan, called the “21st Century Caregiving and Education Workforce,” to be invested over 10 years to fortify the universal child and elder care in the U.S.
Market participants also may watch the Senate hearing at 2 p.m. ET for controversial Federal Reserve nomination pick Judith Shelton. Shelton, who was an informal Trump adviser during his presidential campaign, has been a longtime advocate for tying the dollar’s value to gold. The committee will also vote on a second Trump Fed nominee, Christopher Waller, the director of research at the St. Louis Fed, who is expected to be confirmed easily.
Capitol Report:GOP’s Kennedy says he’ll vote for Fed nominee Judy Shelton, expects swift action
Which stocks are in focus?
- Shares of Coca-Cola Inc. rose 2.4% Tuesday, after the beverage and snack giant reported a second-quarter profit to topped expectations but revenue that fell a bit shy, amid challenges resulting from the coronavirus pandemic
- International Business Machines IBM, +0.57% shares gained 0.7% in, after the tech giant reported another decline in revenue but produced more profit and sales than Wall Street expected amid the COVID-19 pandemic.
- Shares of Lockheed Martin Corp. LMT, +2.59% rallied 2.5% Tuesday, after the aerospace and defense company reported second-quarter profit and sales that rose above expectations, and lifted its full-year outlook.
- Philip Morris International Inc. shares PM, +3.93% rose 4.1% in Tuesday trading after the Marlboro parent reported second-quarter earnings and revenue that beat expectations.
- Investors are also awaiting results from Synchrony Financial SYF, +0.17% and United Airlines parent United Airlines Holdings Inc. UAL, +2.19%
- Tapestry Inc. TPR, +4.38%, parent of the Coach, Stuart Weitzman and Kate Spade brands, said Chief Executive Jide Zeitlin is resigning from his role and from the board for personal reasons. The company named Chief Financial Officer Joanne Crevoiserat as interim CEO. Its stock was up 4.5%
- Job-networking site LinkedIn is cutting about 960 jobs, or 6% of its work force, as it moves to align the business with the new COVID-19 world. In a message posted on the Microsoft Corp.-owned MSFT, -0.14% company’s website, Chief Executive Ryan Roslanksy said LinkedIn isn’t immune to the effects of the pandemic. Shares of Microsoft were off 0.4%.
- Shares of small-cap Moleculin Biotech Inc. MBRX, +18.25% soared Tuesday, after the company said a second round of laboratory testing confirmed antiviral activity for WP1122, its candidate as a treatment for COVID-19. Its stock surged 20.9%.
- EBay Inc. EBAY, -3.33% said it’s selling its classified ad business to Norway’s Adevinta ADE, +25.91% for $9.2 billion in cash and stock. Shares of eBay edged 3% lower, while shares of Oslo-listed Adevinta shares closed up 26%.
- Shares of Tailored Brands Inc. TLRD, +9.15% rose 7.6% Tuesday, after the parent of apparel retailers Men’s Wearhouse and Jos. A. Bank said it expects to cut about 20% of its corporate workforce and close up to 500 stores.
- Amazon.com’s stock AMZN, -0.74% retreated 1.2% Tuesday, after surging on Monday.
- Exchange-traded funds with energy exposure, the Energy Select Sector SPDR ETF XLE, +5.82% and the SPDR S&P Oil & Gas Exploration & Production ETF XOP, +6.81% roared to their best day in about six weeks Tuesday as investors bet on undervalued sectors amid a surge in crude-oil demand prompted by hope that stimulus measures implemented by developed nation governments will lift demand for crude and its byproducts.
- Shares of Immuron Ltd. IMRN, +41.11% more than doubled Tuesday, but pulled back sharply from earlier highs, after the Australia-based biopharmaceutical company announced a registered direct offering of 1.07 million American depositary shares.
- Wells Fargo & Co. WFC, +5.88% named Mike Santomassimo as chief financial officer effective in the fall, replacing John Shrewsberry, who is retiring.
How are other markets trading?
Germany’s DAX 188658, +0.84% finished 1% higher on Tuesday after the EU forged its landmark recovery package, the gains for the index of Europe’s largest economy were helping to erase most of the year-to-date losses for the gauge.
Stoxx 600 Europe index SXXP, +0.31% gained 0.3%, while the U.K.’s FTSE UKX, +0.13% picked up 0.1%, but the European benchmarks finished off their best levels.
In Asia, the Nikkei NIK, +0.73% closed 0.7% higher, while China’s CSI 300 gauge 000300, +0.22% added 0.2% after jumping nearly 3%. South Korea’s Kospi 180721, +1.39% rose 1.4% and Hong Kong’s Hang Seng HSI, +2.30% gained 2.3%.
Gold futures GCQ20, +1.51% climbed $26.50, or 1.5%, to settle at $1,843.90 an ounce on the New York Mercantile Exchange, ending at its highest level for the most-active contract since Sept. 2011. August futures for the U.S. crude benchmark CLQ20, +2.79% advanced 2.2%, a 89 cent gain, at $41.71 a barrel, after trading at a four-month high at the intraday peak.
The 10-year Treasury note yield TMUBMUSD10Y, 0.602% was edging down by 1 basis point, to around 0.60%. Bond prices move in the opposite direction of yields.
In currency markets, the dollar was softening for a second session this week, off 0.8%, against its six major rivals based on trading of the ICE U.S. dollar index. DXY, -0.81%
Originally published on MarketWatch