Shares rose Tuesday, with cyclical shares continuing to outpace earlier high-flying tech shares, while the S&P 500 neared its all-time closing high from February, almost completing a round of its pandemic-induced plunge earlier this year .
What do large indices do?
The Dow Jones Industrial Average DJIA,
rose 305 points, or 1.1%, to 28,096, while the S&P 500 SPX,
advanced 16 points, or 0.5%, to 3,377. The tech-heavy Nasdaq Composite COMP,
lowered the other benchmarks, 15 points, as 0.1%, to 10.953.
The Dow DJIA,
on Monday rose 357.96 points, or 1.3%, to end at 27,791.44, while the S&P 500 SPX,
made 9.19 points, or 0.3%, up to close at 3,360.47, just 0.8% away from its Feb. 19 record close to 3,386.15. The Nasdaq Composite COMP,
meanwhile, it dropped 42.63 points, or 0.4%, ending at 10,968.36.
What drives the market?
Investors on Monday accounted for the drop in high-flying tech stocks as sectors, energy and other hit sectors rolled around. Some analysts were looking for a potentially sharp rotation in the full term from popular growth-oriented stocks to more volatile stocks, once there were signs that the worst of the pandemic was over and the economy could reopen after a full rebound.
To read:Do not assume that this rotation of shares will remain on the market, says JP Morgan
“In our central scenario, we do not expect renewed national lockdowns. Moderate restrictions on activity should be sufficient to keep outbreaks manageable, with a vaccine widely available from 2Q 2021, ”said Mark Haefele, chief investor in global wealth management at UBS.
Combined with expanding monetary policy and a moderate impetus for fiscal stimulus, this would enable a boost in economic activity to pre-pandemic levels by 2022, he said, in a note. With yields anchored in the vicinity of record lows, the premium risk for equities could normalize to pre-pandemic levels, allowing the S&P 500 to trade at the end of June 2021, Haefele said.
Dow’s gains in midday trading were offset by shares of JPMorgan Chase & Co. JPM,
American Express Co. AXP,
and Boeing Co. BA,
but with Apple Inc. AAPL,
the biggest drag, and shows the shift of the day away from rising tech stocks to stocks that are more related to economic performance.
“You’re starting to see a big uptick in trading,” said Sam Hendel, president and co-portfolio manager at Levin Easterly Capital, in an interview, about the recent rally in equities away from the handful of technology companies that have led stock benchmarks higher, because the pandemic had to remove many white collar lanes from home.
“Tech has really shone,” he said, but added that several catalysts, including optimism to make a profit and the development and distribution of an effective vaccine, would benefit beneficial downtrodden stocks in the long run.
The number of new COVID-19 cases in the U.S. has dropped 18% in the past 14 days, according to a New York Times tracker, while deaths have dropped by 6%.
“In several major states (Arizona, California, Florida, Texas) the use of hospital beds by patients with COVID-19 is now clearly declining. This is a critical trend that should limit further reopening of reversals in the full term, ‘analysts at Macquarie wrote in a note.
However, they warned that the latest model update from the Institute for Health Metrics and Evaluation at the University of Washington points to increasing risks in the fall. It shows 26 states with a chance greater than 1 in 40 to break their capacity of intensive care unit by November 1, up from 17 states earlier. Another 12 states risk doing so by Dec. 1, they noted.
Meanwhile, Russia registered the world’s first COVID-19 vaccine, President Vladimir Putin said on Tuesday. The announcement marked a milestone in the race to find a vaccine against the disease, but raised international concerns that Moscow had hastened the clinical evaluation of the treatment.
To look: Russia’s accelerated COVID-19 vaccine greeted with alarm as experts say Phase 3 trial is essential
White House and top Democratic lawmakers announced Monday that they were ready to resume talks on a coronavirus aid package after President Donald Trump signed executive orders over the weekend that would expand some elements of existing aid that would eventually of July disappeared, though little sign of movement. Trump’s commissions, meanwhile, could face legal and logistical obstacles.
Investors, however, seem to be late in responding to Trump’s remark late Monday, in which he said the administration was considering a capital gains cut.
“This is old news in a sense, because Trump has pushed this idea before, but markets may take it more seriously this time, because the president certainly seems to overtake the deadlocked Congress if he can,” Marios Hadjikyriacos said. investment analyst at XM, in a note.
The National Federation of Independent Businesses said its index for Small Business Optimism dropped to 98.8 in July to 1.8 points from June. Economists surveyed by The Wall Street Journal expect a reading of 99.9.
The July producer price index rose by 0.6% in July. Economists surveyed by MarketWach had forecast an increase of 0.3%. Core PPI, which slashed food and energy costs, rose 0.3%.
Which companies are in focus?
- Airline shares were on the rise, lifted by a rebound in traveler demand to its highest level since the pandemic began, as well as notable analyst remarks. United Airlines Holdings Inc.
UAL,
+ 2.09%
shares were up 2.8%, American Airlines Group Inc.
AAL,
+ 2.89%
rose 3.4%, and Delta Air Lines Inc. DAL,
+ 4.35%
shares increased 4.3%. - Shares of Canada Goose Holdings Inc.
GOOS,
-3.58%
fell 3.2% after the company reported an increasing loss and a sharp drop in revenue. - Casper Sleep Inc.
CSPR,
-5.74%
shares fell 4.3% after the mattress seller reported a narrower-than-expected loss in the second quarter. - Shares of Uber Technologies Inc. UBER,
-0.77%
fell 1% and Lyft Inc.
LIFT,
+ 1.17%
received 0.6% after a California judge on Monday ruled that companies that drive must classify their drivers as employees because of a new state law. - Airbnb Inc., Another sharing economy company, is preparing to submit its paperwork to go public later this month, laying the groundwork for a potential end-of-year listing, The Wall Street Journal reported Tuesday, and referred people familiar with the matter.
- Beat down financial sector equities increased as Treasury yields increased, with the Financial select sector SPDR ETF
XLF,
+ 2.59%
up 1.5%. - Qualcomm Inc. QCOM,
+ 4.10%
shares were 4.2% higher after a report that a U.S. appeals court threw an anti-trust ruling against the chipmaker.
What are other brands doing?
In trade in Asia, China’s CSI 300 Index 000300,
fell 0.9%, while Hong Kong’s Hang Seng Index HSI,
rose 2.1% and Japanese Nikkei 225 Index NIK,
advanced 1.9%.
In Europe, the pan-European Stoxx 600 Europe Index is SXXP,
and the FTSE 100 UKX,
each rode 1.7%.
Proceeds from the 10-year Treasury note TMUBMUSD10Y,
rose 8 basis points to 0.65% when investors lost port holdings. Bond prices move upside down to yields.
Gold GC00,
pulled back from record highs Tuesday, with December futures tumbling 4.6% to settle at $ 1,946.30 per ounce. Crude oil was flat, with US benchmark futures CL.1,
trading about $ 41.92 per barrel.
The greenback was 0.1% down, with the ICE US Dollar Index DXY,
a meter from the goat against a half-dozen key rivals, at 93.52.
.
