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Market Snapshot: Dow pares losses as tech-heavy Nasdaq briefly touches 10K milestone after clinching all-time intraday record high

Market Snapshot

Nasdaq-100 trades higher; Macy’s falls as stores reopen

AFP/Getty Images

The Dow and S&P 500 were still under slight pressure Tuesday afternoon, but the Nasdaq Composite was trading at fresh intraday highs on growing optimism about the U.S. economy’s ability to rebound from the coronavirus pandemic.

Read: IPO market gears up for another busy week with 8 deals expected to raise $2 billion

How are benchmarks faring?

The Dow Jones Industrial Average
was off 173 points, or 0.6%, at about 27,396, with the blue-chip gauge on the verge of snapping its longest win streak, six days, since the eight-session stretch ended Sept. 13, 2019. The index, however, is off its Tuesday lows at 27,151.06. The S&P 500 index
was down 12 points, or 0.4%, at around 3,219, while the Nasdaq Composite Index
turned higher, gaining 68 points, or 0.4%, at about 9,993, after briefly touching 10,000.

Meanwhile, the Nasdaq-100 index
representing the largest companies within the Nasdaq Composite by market value, was up 95 points, or 1%, at 9,996.

On Monday, the Dow finished within 7% of its Feb. 12 closing peak, while the S&P 500 index ended the session 4.5% from its Feb. 19 record closing high. The Nasdaq gained 110.66 points, or 1.1%, ending at 9,924.74, marking its first all-time closing record in four months.

What’s driving the market?

The quickest stock market slump on record in February and March has been followed by one of the quickest recoveries ever, fuelled by historic financial aid from the U.S. government and the Federal Reserve.

Those backstops have helped lift not only technology behemoths engaging in swift business during COVID-19 lockdowns, but also lagging value stocks and downtrodden shares of companies hard-hit by the pandemic.

“An incredibly narrow market had been driving the market higher,” said Mike Skillman, chief executive officer of Cadence Capital Management in Boston. “I just knew the spring was getting so compressed,” he told MarketWatch. “The time was getting extraordinarily ripe for this kind of turn to happen.”

By Monday’ close, investors in S&P 500 index stocks had recovered all losses for the year, following data published last Friday that showed American employment surprisingly increased from April to May.

However, the National Bureau of Economic Research also on Monday declared the U.S. recession started in February, ending a 128-month expansion — the longest dating to 1854. The World Bank’s forecast is for the global economy to shrink by 5.2% this year because of the coronavirus pandemic.

A report Tuesday on U.S. small-business owners in May turned more optimistic about an economic rebound and shifted to the view that a coronavirus-induced recession will be “short-lived,” a closely followed survey showed. The optimism of small companies in the U.S. economy rose 4.5 points last month to 94.4, the National Federation of Independent Business said Tuesday. The increase was twice as large as Wall Street had forecast.

“Many money managers have been caught under-invested and they are under tremendous pressure. They have to publish quarterly reports at the end of this month,” wrote independent market analyst Stephen Todd in a Monday research note.

Meanwhile, nearly 10 million people lost their jobs in April after a record 14.6 million were thrown out of work in March, Tuesday data from the Labor Department shows, underscoring the widespread devastation to the U.S. labor market from the coronavirus.

Job openings also fell to 5 million in April from 6 million in the prior month, according to a Labor Department report that’s released with a one-month delay.

Which stocks are in focus?
  • Macy’s Inc.
    stock traded lower, relinquishing an early gain after the department store retailer guided for first-quarter losses that are ahead of expectations and said re-opened stores are outperforming.

  • Shares of online used-car seller Vroom Inc.
    rose more than 100% Tuesday, the first trading day after the company’s initial public offering, going as high as $45.

  • Shares of Hertz Global Holdings Inc.
    tumbled 16.7% a day after the car rental company erased all of its losses after declaring bankruptcy. Gains in Hertz have come amid increasing signs that travel demand continues to improve.

  • Shares of Brown-Forman Corp.
    edged up Tuesday, after the parent of alcoholic beverage brands including Jack Daniel’s, Finlandia and Korbel reported a fiscal fourth-quarter profit that missed expectations, while sales fell less than forecast helped by “strong growth” in off-premise and e-premise sales. Class A shares were up 3.6%, while Class B shares were gaining 3.7%.

  • Hanesbrands Inc.
    stock edged 0.2% higher after it named Stephen Bratspies to the chief executive role, effective August 3.

  • Shares of T-Mobile US Inc.
    fell 1.5% after Guggenheim analyst Mike McCormack downgraded the stock to neutral from buy.

  • Verso Corp.
    said Tuesday that it expects to lay off about 1,000 employees, as it idles mills in Duluth, Minnesota and Wisconsin Rapids this summer, given the accelerated decline in demand for graphic paper given the COVID-19 pandemic. Shares tumbled more than 4%.

  • Delta Airlines
    American Airlines
    and United Airlines
    all gave back part of their recent gains after recovering some ground as Americans begin to travel again. Shares of Delta were down 8%, those for American were off 9%, while United’s stock skidded 8% lower.

  • Boeing Co
    shares were down 3.8% Tuesday, after that jetliner said 737 MAX jet cancellations exceeded orders in May, though the company found a bright spot with fresh deals for cargo planes.

How did other assets trade?

Oil prices edged higher
Tuesday, even as investors worried about the prospect of increased production from some countries, even after an OPEC pact over the weekend had been reached. West Texas Intermediate oil rose 10 cents, or 0.3%, to $38.28 a barrel on the New York Mercantile Exchange.

In precious metals, August gold
on Comex climbed $16.80, or 1%, to settle at $1,721.90 an ounce.

The 10-year Treasury note yield
fell 6 basis points to about 0.82%. Bond prices move in the opposite direction of yields.

The greenback edged 0.3% lower against its major rivals, as gauged by the ICE U.S. Dollar index

In global equities, the Stoxx Europe 600 index
closed 1.2% lower and the FTSE 100 index
fell 2.1%.

In Asia, Japan’s Nikkei
closed 0.4% lower, the China CSI 300
finished 0.6% higher and Hong Kong’s Hang Seng Index
climbed 1.1% higher. South Korea’s Kospi index
gained 0.2%.

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