Tuesday’s Stock Market Close: US Equities Rise As Markets Finish Strong Second Quarter, Despite Pandemic

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KEY POINTS

  • New spike in covid-19 infections have reported in some southern and western states
  • Federal Reserve chairman Jerome Powell warned the pandemic will weigh on economic recovery
  • Chinese officials approved controversial national security laws for Hong Kong.

U.S. stocks finished a strong second quarter as traders again shrugged off rising cases of covid-19 and postponed reopenings of businesses in some virus-stricken states.

The Dow Jones Industrial Average gained 217.08 points to 25,812.88, while the S&P 500 rose 47.05 points to 3,100.29 and the Nasdaq Composite Index climbed 184.61 points to 10,058.77.

For the quarter, the Dow gained 17.8%, the Nasdaq climbed 30.6% and the S&P jumped 19.9%.

Tuesday’s volume on the New York Stock Exchange totaled 3.62 billion shares with 2,012 issues advancing, 57 setting new highs, and 988 declining, with six stocks setting new lows .

Active movers were led by Workhorse Group Inc. (WKHS), Inovio Pharmaceuticals Inc. (INO) and Vaxart Inc. (VXRT).

On Tuesday, Nasdaq was boosted by strength in Amazon (AMZN) , up 2.93%; and Micron Technology (MU), up 4.83%, which posted better-than-expected earnings.

However, covid-19 cases continue to climb in the U.S. especially in the south and west, prompting some governors to postpone or scale back planned reopenings.

White House adviser Dr. Anthony Fauci warned the U.S. could see 100,000 new cases of covid-19 a day if public behavior doesn’t change.

New Jersey Gov. Phil Murphy said his state will delay allowing indoor dining in restaurants.

Federal Reserve chairman Jerome Powell told the House Financial Services Committee that in the wake of the pandemic, the economic outlook is cloudy.

Treasury Secretary Steven Mnuchin told Congress that the White House wants to help hard-hit businesses like restaurants in the next round of stimulus.

China approved national security laws for Hong Kong.

“Output and employment remain far below their pre-pandemic levels,” he said. “The path forward for the economy is extraordinarily uncertain and will depend in large part on our success in containing the virus. A full recovery is unlikely until people are confident that it is safe to reengage in a broad range of activities. The path forward will also depend on the policy actions taken at all levels of government to provide relief and to support the recovery for as long as needed.”

“A combination of stimulus, positive trends in the virus, economic reopenings and hopes for a vaccine drove stocks higher in [the second quarter],” wrote Tom Essaye, founder of The Sevens Report. “As we begin [the third quarter], only one of those tailwinds is currently in place: Stimulus. That doesn’t mean we’ll see a correction, but be suspect of market rallies until we can add more forces supporting stocks, because we’re one stimulus disappointment away from an ugly day.”

“It’s difficult to see the market continue the way it has been throughout the summer,” said Quincy Korsby, chief market strategist at Prudential Financial.

Overnight in Asia markets finished higher, as China’s Shanghai Composite index climbed 0.78%, Hong Kong’s Hang Seng exchange rose 0.52% and Japan’s Nikkei-225 gained 1.33%.

In Europe markets finished mixed, as Britain’s FTSE-100 fell 0.9%, while France’s CAC-40 slipped 0.19% and Germany’s DAX gained 0.64%.

Crude oil futures slipped 0.68% at $39.43 per barrel, Brent crude edged up 0.39% at $41.43. Gold futures rose 0.95%.

The euro slipped 0.07% at $1.1236 while the pound sterling gained 0.76% at $1.2392.

The yield on the 10-year Treasury rose 2.67% to 0.653% while yield on the 30-year Treasury gained 1.29% to 1.409%.