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market-snapshot:-dow-ends-114-points-higher,-us.-stocks-snap-2-day-losing-streak,-as-investors-await-stimulus-progress

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Market Snapshot: Dow ends 114 points higher, U.S. stocks snap 2-day losing streak, as investors await stimulus progress

Market Snapshot

Gold settles at highest level in history at $1,931 an ounce

New York Stock Exchange.


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Major U.S. stock indexes finished higher Monday, as investors watched lawmakers haggle over a coronavirus rescue program and braced for the busiest week of earnings season.

How did major benchmark perform?

The Dow Jones Industrial Average
DJIA,
+0.43%

closed 114.88 points higher, or 0.4%, at 26,584.77, while the S&P 500
SPX,
+0.74%

rose 23.78 points, or 0.7%, to finish at 3,239.41. The tech-heavy Nasdaq Composite
COMP,
+1.67%

led the market’s gains on Monday, ending 173.09 points higher, or 1.7%, at 10,536.27.

Major benchmarks ended modestly lower Friday, leaving the Dow with a weekly loss of 0.8%, while the S&P 500  declined 0.3% for the week. The Nasdaq  lost 1.3% in a week that saw previously high-flying tech shares suffer the brunt of selling pressure.

What drove the market?

Investors were buying technology stocks Monday, while keeping an eye on progress in Washington on a second major U.S. spending plan, a raft of geopolitical concerns and the march higher in U.S. COVID-19 cases and deaths.

“It’s a tech day,” said Donald Townswick, director of equity strategies at Conning, in an interview, adding that he expects high-flying technology stocks to stay aloft and “continue to dominate for the reasons they have,” including their ability to provide top-line growth, while most other companies haven’t during the pandemic.

Senate Republicans also were expected on Monday to unveil their plans to provide additional coronavirus aid, following disagreements between themselves and the White House on the proposal, news reports said.

However, Republican plans to tackle the legislation in a piecemeal approach remain stiffly opposed by Democrats. The talks come as a provision that provides an additional $600 a week in unemployment benefits to more than 32 million out-of-work Americans expires at the end of the month.

“There is a very strong case to be made for additional fiscal stimulus. Both sides of the political aisle want to get something down,” said Talley Leger, senior investment strategist for Invesco, in an interview.

He noted high-frequency data-tracking movements of Americans’ shopping habits and dining reservations had stalled in several states, suggesting the recovery in U.S. economic activity during the pandemic was at risk of coming apart.

U.S.-China tensions simmered, as the U.S. closed its consulate in the western Chinese city of Chengdu at Beijing’s demand, in retaliation for Washington ordering the closure of China’s Houston consulate.

Earnings season continues apace this week, including results from a host of tech heavyweights. Google parent Alphabet Inc.
GOOG,
+1.21%

GOOGL,
+1.40%
,
Amazon.com
AMZN,
+1.53%
,
Apple Inc.
AAPL,
+2.37%

and Facebook Inc.
FB,
+1.20%

are due to report Wednesday and Thursday.

“Markets are fairly quiet today, while continuing their upward momentum earlier this month,” said Charlie Ripley, senior investment strategist for Allianz Investment Management in Minneapolis, in an interview. But he also sees “a tremendous amount of uncertainty in the market,” including around “high expectations” around tech earnings.

Chief executives from all four companies will appear in congressional hearings on Wednesday to answer questions about their business practices.

Earnings Watch:Big Tech’s big test arrives in the busiest week of earnings season

Through the end of last week, companies representing 30.5% of the S&P 500’s market value had reported second-quarter results, with earnings beating expectations by 13.7% in aggregate, with 79% of companies beating lowered estimates, said Jonathan Golub, chief U.S. equity strategist at Credit Suisse, in a note.

See:S&P 500 earnings have been as bad as feared, even as the beat rate has improved

Price action, however, has been more muted than normal, he wrote, with companies beating both revenues and earnings outperforming the market by 1.2% versus a historical average of 1.6%. Companies missing on both measures have lagged by just 0.7% versus a historical average of 3.1%.

On the economic front, durable-goods orders for June climbed 7.3%, and orders minus transportation rose 3.3%, with core capital-goods orders seeing a similar rise.

The Federal Reserve will conclude its two-day policy meeting on Wednesday. Investors generally don’t expect the central bank to make any major announcements, but are looking for Chairman Jerome Powell to maintain a dovish tone.

Powell’s remarks also might resonate on Capitol Hill as negotiations toward a coronavirus rescue package continue, said Bernard Baumohl, chief global economist at the the Economic Outlook Group, in a note.

“If the Fed chairman emphasizes the urgent need for fiscal policy to address the widening economic divide in this country caused by the COVID-driven recession, it will be hard for those on Capitol Hill to ignore it,” he said.

Which companies were in focus?
How did other markets trade?

In Asia, China’s CSI 300 gauge
000300,
+0.50%

rose 0.5%, the Shanghai Composite Index gained 0.3%, while Hong Kong’s Hang Seng inde x
HSI,
-0.41%

shed 0.4%.

In Europe, the Stoxx 600 Europe index
SXXP,
-0.31%

closed down 1.1%, while the U.K.’s FTSE 100
UKX,
-0.30%

declined 0.3%.

Gold futures
GCQ20,
+1.43%

surged $33.50 to a fresh record Monday, up 1.8%, to settle at $1,931 an ounce on the New York Mercantile Exchange, with its latest boost courtesy of a falling dollar. In currency markets, the dollar weakened 0.8% against its six major rivals, falling to around its lowest level in two years, as gauged by the ICE U.S. Dollar Index
DXY,
-0.10%
.

September futures for the U.S. crude benchmark
CLU20,
+0.33%

gained 31 cents, or nearly 0.8%, to settle at $41.60 a barrel on the New York Mercantile Exchange.

The 10-year Treasury note yield
TMUBMUSD10Y,
0.616%

rose 2 basis points to 0.609%, its biggest daily gain since July 10. Yields move in the opposite direction of prices.

William Watts contributed reporting

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