Dow climbs 400 points early Monday after housing data, even as coronavirus cases top 10 million

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The Dow Jones Industrial Average rallied sharply early Monday partly on the back of upbeat economic data and a surge in shares of Boeing. However, investors were still parsing weekend data that highlight the persistence of coronavirus in hot spots, including Florida, Texas and California, fueling concerns about the economic outlook.

Financial markets in the U.S. will be closed on Friday in observance of the Fourth of July holiday.

How are benchmarks performing?

The Dow Jones Industrial Average DJIA, +1.70% gains 411 points, or 1.7%, at about 25,430; those for the S&P 500 index SPX, +1.04% advanced 30 points, or 1%, at around 3,039, as the industrial and the energy sector climbed but technology and health care lagged behind the 11 sectors of the benchmark.

Meanwhile, the technology-laden Nasdaq Composite Index COMP, +0.67% picked up nearly 60 points, or 0.6%, to 9,818.

On Friday, the Dow put the finishing touches on a weekly decline of 3.3%, declining 700-plus points on the day, while the S&P 500 notched a 2.9% weekly decline and the Nasdaq fell 1.9% for the week.

What’s driving the market?

Markets scored a boost after a report showed that pending home sales in May spiked 44.3%, compared with April, according to the National Association of Realtors. That beat expectations of a 15% rise. Sales were still 5.1% lower compared against the same time last year.

Appetite for risk had been tentative, however, as coronavirus cases world-wide surpassed 10 million, with more a half-million deaths. A dozen states, including Florida, Texas, California and Arizona — now hot spots in the U.S. — reversed reopening plans and implemented tighter restrictions to prevent a further spread of the viral epidemic, the Wall Street Journal reported.

Health and Human Services Secretary Alex Azar said that the “window is closing” to manage the resurgence of the epidemic in the U.S., on Sunday during NBC’s “Meet the Press.”

“We’ve got the tools to do this,” Azar said. “But the window is closing. We have to act, and people as individuals have to act responsibility.”

An inability to curtail the spread of COVID-19 would prove problematic for economic projections that factor in a sharp, V-shaped rebound of business activities, which been stalled or closed to address the public health crisis.

The U.S. recorded more than 42,000 new cases Saturday, according to data compiled by Johns Hopkins University, marking a second straight daily total over 40,000, even if it represented a decline from Friday’s record 45,255 tally. Florida, Nevada, George and South Carolina reported a surge in new cases on Saturday, Politico reported.

“There’s a huge question mark hanging over the stock market recovery, with investors seemingly not currently pricing in the prospect of restrictions could be re-imposed across the globe,” wrote Craig Erlam, senior market analyst at Oanda, in a Monday research note.

“I’m not saying we’re going to see a repeat of the late March/April period but a significant setback in the process now looks perfectly feasible, further threatening the economic recovery and may the longer-term prospects,” he said.

Meanwhile, in China, industrial profits in May were up 6% from a year earlier, representing the first increase in 2020, official statistics released over the weekend showed.

Investors are expecting some turmoil due the holiday-shortened week and end-of-quarter activity among investment managers, including pensions and mutual funds.

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“In summary, with two days left before the quarter dies, window dressing is likely to increase volatility with some sectors gaining over others,” wrote Peter Cardillo, chief market economist at Spartan Capital Securities. “However, the trend is likely to remain negative ahead of this weeks key macro indicators and the upcoming earnings season,” he said, referring to corporate quarterly results that kick of in earnest in the middle of July.

Looking ahead, New York Fed President John Williams is set to speak at 3 p.m.

Which stocks are in focus?
  • Facebook FB, -0.25% Starbucks Corp. SBUX, +1.50% Unilever UN, -1.01% ULVR, -1.37% will be in focus after announced Sunday that it is “pausing” advertisements on all social-media platforms, two days after consumer-products conglomerate said it was halting U.S. advertising on Facebook and Twitter TWTR, +1.45% through year-end over ineffective policing of hate speech, leading to a sharp Friday selloff in both stocks. Shares of Facebook were trimming losses, down about 0.1%, while Twitter’s stock reversed sharp losses to gain 1.8%.
  • U.S. air-safety regulators are set to begin key flight tests of Boeing Co.‘s BA, +6.16% 737 Max as early as Monday, with the aim of returning the planes to service around the end of the year. Boeing’s shares surged more than 8%.
  • Chesapeake Energy Corp. CHK, -7.27% said Sunday that it had filed for bankruptcy protection as an oil- and gas-price rout stoked by the coronavirus pandemic proved to be the final blow for a shale-drilling pioneer long hamstrung by debt. Its shares were halted at the open.
  • Shares of Coty Inc. COTY, +8.37% soared more than 10% after the cosmetics, fragrance and skin-care company announced a deal with Kim Kardashian West to develop a beauty business globally.
  • Aurora Cannabis Inc. ACB, -0.56% said Monday that a co-founder and former chief executive, Terry Booth, is retiring from its board.Its shares were up 0.7% after being down sharply earlier in the session.
How are other assets performing?

West Texas Intermediate U.S. crude CLQ20, +1.40% for August delivery rose 53 cents, or 1.3%, to trade at $38.97 a barrel on the New York Mercantile Exchange. In precious metals, gold futures US:GCM20 rose $5.70, or 0.3%, at $1,786 an ounce.

The 10-year Treasury note yield TMUBMUSD10Y, 0.639% was off 0.9 basis point to 0.634% amid inflows into safe-haven assets. Bond prices move inversely to yields.

The greenback was flat against a basket of its major rivals, based on trading in the ICE U.S. Dollar Index. DXY, +0.11%

In global equities, the Stoxx Europe 600 index SXXP, +0.47% was trading 0.8% higher and London’s FTSE 100 UKX, +1.22% were rallying 1.4%.

In Asian markets, the Japanese Nikkei NIK, -2.29% lost 2.3%, Hong Kong’s Hang Seng HSI, -1.01% lost 1%, while South Korea’s Kospi declined 1.9%. China’s CSI 300 000300, -0.70% retreated 0.7%, while the Shanghai Composite Index SHCOMP, -0.60% declined 0.6%.