The Dow Jones Industrial Average climbed Monday, partly on the back of upbeat economic data and a surge in shares of Boeing. But investors also were watching 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, +2.32% gained 448 points, or 1.8%, at about 25,462. The S&P 500 index SPX, +1.46% advanced 29 points, or 1%, at around 3,038, as the consumer discretionary and industrials sectors climbed.
Meanwhile, the technology-laden Nasdaq Composite Index COMP, +1.19% picked up 62 points, or 0.6%, to 9,818.
What’s driving the market?
Major U.S. stock indexes were higher Monday, but off the session’s best levels, as economic data continued to surprise to the upside, even as several states with surging COVID-19 infections have been forced to reimpose limits on business activities and social gatherings.
Markets scored an early 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.
For owners who plan to use their residential properties as income, however, rents have been falling in many parts of the nation as millions remain out of work during the pandemic.
“We still have a lot of work to do, but certainly the economy has recovered faster than expected,” said Brent Schutte, chief investment strategist, Northwestern Mutual Wealth Management Co., in Wisconsin. “The rising case count does raise some issues,” he told MarketWatch, but also said he thinks “the likelihood of a nationwide lockdowns appears remote.”
Coronavirus cases world-wide surpassed 10 million, with more than 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.
New York Gov. Andrew Cuomo on Monday said he may slow New York City’s broader Phase III reopening slated for next Monday, which would allow indoor dining at restaurants and more personal care services and outdoor activities to resume.
An inability to curtail the spread of COVID-19 would prove problematic for economic projections that factor in a sharp, V-shaped rebound if business activity stalls or is ordered to close to address the public health crisis.
“From our perspective, the virus surging in the South simply underscores our long-held view that it is the virus, not monetary or fiscal policy controlling the economy’s recovery,” wrote TS Lombard’s chief U.S. economist Steven Blitz and head of strategy Andrea Cicione, in a client note.
“Because of the virus, habits have changed, the willingness to re-engage has declined, and the arc of consumption growth will be flatter.”
A survey of chief executive officers of the nation’s biggest companies released on Monday showed they expect the business impact of the pandemic to linger until at least 2021, according to the Business Roundtable’s second-quarter report.
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, +2.11% Starbucks Corp. SBUX, +2.66% Unilever UN, -1.48% ULVR, -1.68% is 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, +1.51% through year-end over ineffective policing of hate speech, leading to a sharp Friday selloff in both stocks. Shares of Facebook was up 1.74, while Twitter’s stock was 2.1% higher.
- Shares of Gilead Sciences Inc. GILD, -0.01% were trading flat Monday after the drugmaker disclosed that remdesivir, its experimental COVID-19 treatment, will cost $2,340 for a course of treatment.
- U.S. air-safety regulators resumed key flight tests of Boeing Co.‘s BA, +14.39% 737 Max on Monday, with the aim of returning the planes to service around the end of the year. Boeing’s shares surged more than 12%.
- 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, +13.39% soared more than 13% 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, -0.88% said Monday that a co-founder and former chief executive, Terry Booth, is retiring from its board.Its shares down 1.2%.
- AMC Entertainment Holdings AMC, +5.74% said on Monday it would delay the planned opening of its theaters for about two weeks until July 20. Shares of the company were up 3.1%.
How are other assets performing?
West Texas Intermediate U.S. crude CLQ20, +2.88% for August delivery rose $1.21 cents, or 3.1%, to close at $39.70 a barrel on the New York Mercantile Exchange. In precious metals, gold futures GCM20, -0.44% closed modestly higher, up 90 cents, or 0.05%, to settle at $1,781.20 an ounce.
The greenback was up 0.1% against a basket of its major rivals, based on trading in the ICE U.S. Dollar Index. DXY, +0.05%
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%.