Stock benchmarks cut early Thursday morning declines, as claims for the first time on unemployment benefits fell much faster than expected, but investors seemed a bit hesitant to push ahead. Stocks close to record levels amid a deadlock over the new coronavirus aid package.
What are the key benchmarks doing?
Dow Jones Industrial Average DJIA,
trading 55 points, 0.2%, nearly 27,920 lower, while the S&P 500 SPX,
plus about 2 points, less than 0.1%, to nearly 3,382 trading. Nasdaq Composite COMP,
up 83 points, or 0.8%, to trade nearly 11,095.
The Dow on Wednesday increased by 289.93 points, or 1.1%, to end at 27,976.84, while the S&P rose 46.66 points, or 1.4%, to close at 3,380.35 , 0.2% lower than the record close of 3,386.15 on Feb. 19. Large-cap trading benchmarks as high as 3,387.89 at the end of trading. The Nasdaq Composite rose 229.42 points, or 2.1%, to end at 11,012.24.
What drives the market?
Initial unemployment claims, perhaps the most closely watched government data on the pandemic, show a marked improvement in the most recent week, falling to 963,000. Economists surveyed by MarketWatch, on average, forecast a higher number of seasonally adjusted initial requests for the week ending August 8.
That saw the stock futures contract momentarily erase small losses to turn positive. But the question remains about fiscal stimulus for an economy still reeling from the effects of the pandemic.
Top Democrats and White House officials spoke by phone Wednesday about another coronavirus aid, but both sides blamed the other for the impasse that has continued since. When negotiations to extend some of the measures had expired, including additional unemployment benefits, collapsed at the end of last week. President Donald Trump over the weekend signed executive orders to partially extend some of those measures, but they face legal challenges and doubts about their effectiveness due to logistical constraints. .
But with the S&P 500 knocking on its all-time high, investors appear to be looking beyond the conflict, if cautious, analysts say.
“This is just a week that many Americans have not had their unemployment tested. Diane Jaffee, senior portfolio manager at TCW, said we probably won’t see a full split in just a week, ”said Diane Jaffee, senior portfolio manager at TCW, who Note the spike in savings rates as Americans have fallen in the past few months. “I am modestly optimistic but I think we have to look at this data with caution. That fiscal stimulus is super important ”.
Jaffee, herself a value investor, is carefully monitoring the market’s efforts to turn to value stocks. “It was clear that what kept investors from flocking to those stocks was the real belief that we had handled the virus,” she said in an interview. “We’ve had one of the longest economic recovery in a generation, but investors never really believed in it. Investors always look back to the Great Depression and feel much more comfortable with the rate of growth. Worth not getting much love. Once we have effective treatments, we have all of this liquidity rushing in. ”
Overall, the stock market has been underpinned by relatively vibrant economic data although the number of new coronavirus infections remains consistently high in the US.
“The stock markets, in the US and elsewhere are getting comfort from the fact that economic data shows resilience to the viral spike. This has been true for the US economy for a while and we can see it in Asia, too, ”Kit Juckes, global macro strategist at Société Générale, said in a note.
Global data for confirmed COVID-19 infections rose to 20.6 million on Thursday, with the death toll rising to 749,656, according to data compiled by Johns Hopkins University. At least 12.8 million people are confirmed to have recovered. The United States has 5.19 million COVID-19 related deaths and deaths of 166,027.
And while the number of infections in the US remains high, investors are focusing instead on a decline in new infections. During the past week, there were an average of 53,723 cases per day in the US, down 17% from the average two weeks earlier, according to a New York Times follower.
In separate economic news, import prices rose for the third consecutive month, marking the strongest increase in three months since 2011 – though prices remained lower for the year.
Which companies to focus on?
- Shares of Lyft Inc.
The ride-sharing company late on Wednesday said ridership and revenue had more than halved in the second quarter dominated by the pandemic, but layoffs helped the company exceed loss expectations. Also:Uber and Lyft said they could shut down in California if they were forced to classify drivers as employees
- 3M Co.
Shares rose after manufacturers of personal, industrial and consumer safety products reported “broad-based improvement” in sales trends last month. Shares rose 0.8%.
- Share of network equipment manufacturer Cisco Systems Inc.
fell 12% in early-hour trading after reporting a decline in revenue and soft earnings guidance for the current quarter on Wednesday afternoon, then announced that their chief financial officer would resign.
- Tapestry Inc.
Stocks rose higher after Kate Spade and Coach’s parent company reported sales figures that exceeded analysts’ expectations and announced a narrower than expected loss.
- Shares of Novavax Inc.
9% increase, after the biotech company said it had signed a development and supply agreement with Korea’s bioscience concern about the antigenic composition of the COVID-19 vaccine candidate by Novavax.
- SmileDirectClub Inc.
shares fell 14% after the company reported higher-than-Wall Street second-quarter sales but GAAP earnings below Wall Street expectations.
How do other markets trade?
In Asia overnight, China’s CSI 300 000300,
to close 0.3% lower, while the Hong Kong HSI’s Hang Seng Index,
fell to a small part and Japan’s Nikkei 225 NIK,
In Europe, European Index Stoxx 600 Europe SXXP,
0.7% lower and FTSE 100 UKX,
plummeted by 1.3%.
Yield on 10-year Treasury Bond TMUBMUSD10Y,
has slightly increased to 0.686% after the unemployment report was released. Bond prices move inversely with yields.
Gold price GC00,
reversed the initial loss, up 0.4% to 1,956.50 USD / ounce. Crude oil price CLU20,
sideways at $ 42.67 a barrel, a day after hitting last month’s highest closing contract since March 5. Crude oil fell shortly after the International Energy Agency cut. Reduced demand forecast.
Greenback continues to slide, with ICE US Dollar Index, DXY,
A measure of the currency against a half-dozen major rivals, down 0.4% to 93.08.
Continue reading: Don’t expect this stock market turnaround to continue, JP Morgansays