Stock market benchmarks were mostly higher on Monday as investors checked signs that a long-awaited rotation on Wall Street could be extended into more growth-sensitive equities, at the expense of their high-growth counterparts.
Investors also focused on President Donald Trump’s weekend of signing executive orders aimed at extending some elements of coronavirus relief. The measures face likely legal obstacles and questions about their effectiveness, although ongoing tensions from the US-China may also be upside to the market, analysts said.
What do key benchmarks do?
The Dow Jones Industrial Average DJIA,
traded 253 points, or 0.9%, to 27,687. The S&P 500 SPX,
tread water at 3,360, after trading about 1% away from its Feb. 19 closing record of 3,386.15. The Nasdaq Composite COMP,
91 points, or 0.8%, declined to 10,920.
Shares posted gains last week, with the Dow rising 3.8% to 27,433.48, and the S&P 500 posting a weekly rise of 2.5% to 3,351.28, The Nasdaq gaining 2.5% to finish at 11,010. 98. The Nasdaq hit lower on Friday after hitting a series of shots that sent it above the 11,000 milestone. The Dow closed 7.2% below its record finish set on February 12th.
To read: Stock market bull, which mentioned market rally in March, now says that S&P 500 can be valued at 5% to 10%
What drives the market?
Monday’s trade showed signs of a rotation away from high-growth forms in the tech sector to more economically sensitive bicycle companies, a trend that has been brewing since the end of last week.
“As the COVID-19 spike declines over the summer, investors are more inclined to consider the economic recovery than it really is. That could mean the recent move to equities for the first time since the pandemic is real and sustainable, ”said James Meyer, chief investor at Tower Bridge Advisors.
However, investors say it is unclear how far any impending rally in cyclical companies might go, with the coronavirus still posing an obstacle to the U.S. economic recovery and the possibility of new fiscal incentives announced by the Trump administration in question.
To read: A ‘sharper cyclical rally’ could be in the cards, says this analyst
After the White House and Democratic lawmakers failed last week to reach an agreement on a new round of coronavirus assistance, Trump on Saturday signed executive orders aimed at pausing the collection of payment taxes. in rent, to help with student loan payments and to expand a portion of additional unemployment benefits that were due at the end of last month The measures are almost certain to create legal challenges and logistical barriers.
Specifically, one order authorizes states to pay $ 400 per week in additional unemployment benefits, with 75% of the funds coming from the federal government, versus the $ 600 in additional benefits paid at the end of July expired, which is credit for helping lenders and lenders prevent so far a wave of consumer promotion.
To look:States would be billions on the hook under Trump’s plan for unemployment benefits
‘Obviously, this is less stimulus than was previously available, which was probably not enough to stop the economy from slowing down – despite the good US employment news on Thursday and Friday – and kicking the best out of sight. However, it is mathematically better than nothing, ”said Michael Every, Rabobank’s global strategist, in a note.
Meanwhile, U.S.-China tensions have intensified, with Beijing on Monday announcing unspecified sanctions against 11 U.S. politicians and heads of organizations that promote democratic causes, including additional measures targeting Senators Marco Rubio and Ted Cruz, who were already subject to a travel ban.
Also, Chinese jet fighters briefly crossed the Taiwan Strait midline on Monday, news reports said, as U.S. health and human services secretary Alex Azar visited the island. Azar would be the most senior U.S. official to visit Taiwan in nearly four decades.
First season winds up further this week as well. By mid-Friday, companies representing 89% of the S&P 500 Company had reported second-quarter results, according to Jonathan Golub, chief U.S. equity strategist at Credit Suisse Securities. In total, 81% of the companies that reported them had reduced projections.
Earnings Watch:Hot rookies and not-so-hot pot companies are jumping on the slow earnings bandwagon this week
Honors collected an estimated 23.2% in total, with 81% of reported companies hitting their lower projections during the pandemic. Golub also notes that while earnings per share in the second quarter projections exceeded by more than 23%, consensus 3Q estimates have increased by only 3%, and fourth quarter estimates remain unchanged.
In economic data, the number of jobs opened in the US rose 518,000 to 5.8 million, climbing for a second month in a row. But the number of jobs available was around 7 million before the pandemic.
Which companies are in focus?
- Shares of social media platform Twitter Inc.
TWTR,
+ 2.01%
received 1.9% after The Wall Street Journal reported that it had held preliminary talks on a potential combination with TikTok, the video-sharing app that the Trump administration has declared a threat to national security because of its Chinese ownership. Microsoft Corp.
MSFT,
-2.15% ,
However, it is still seen as the front-runner in any deal with TikTok after weeks of talks between it and TikTok’s owner, Beijing-based ByteDance Ltd., the report said. - Shares of Berkshire Hathaway Inc.
BRK.A,
+ 0.53%
BRK.B,
+ 0.53%
rose 0.5% after conglomerate run by billionaire investor Warren Buffett on Saturday reported a 87% jump in profit in the second quarter thanks to the growing value of its investment portfolio, although it also took a write-down of about $ 10 billion on the value of its aircraft parts factories - Marriott International Inc.
MAR,
+ 3.61%
shares were up 4.1% despite the hotel operator reporting a broader-than-expected loss and second-quarter revenue that came below Wall Street estimates. - Shares of Royal Caribbean Cruises Ltd.
RCL,
+ 10.15%
11% climbed Monday, even after the cruise operator announced a larger-than-expected second-quarter loss. But revenues fell less than expected as cruises were halted due to the pandemic. - Eastman Kodak Co. KODK,
-27.62%
Shares of plumped nearly 26% after reports that the U.S. International Development Finance Corp. withdrew its planned loan of $ 765 million after the deal came under regulatory scrutiny.
How do other markets trade?
The 10-year Treasury note yields TMUBMUSD10Y,
rose 1.4 basis points to 0.574%. Bond prices move upside down to yields.
The greenback was 0.1% up, with the ICE US Dollar Index DXY,
a meter from the dollar against half a dozen currencies, at 93.52 early Monday.
In Europe, the Stoxx Europe 600 index is SXXP,
completed 0.3% higher, after ending 2% last week, and the FTSE 100 UKX,
also added 0.3%, following its 2.3% weekly progress.
In Asia, China’s CSI 300 Index 000300,
ended the trade with 0.4%, while Hong Kong’s Hang Seng Index HSI,
0.6% doctors closed.
US benchmark oil CL.1,
traded 91 cents higher, than 2.2%, running $ 42.13 per barrel on the New York Mercantile Exchange. Gold futures for December GCZ20,
added $ 11.80, or 0.6%, to trade at $ 2,039.60 an ounce.
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