U.S. stock indexes rose early Friday for the day and are on pace for a weekly gain as reports that China may increase the pace of American farm purchases gave prices a boost, despite rising coronavirus cases in some American states.
Friday also marks quadruple witching, which occurs on the third Friday of the month in March, June, September and December and can cause higher volumes and volatility as single-stock options, single-stock futures, and stock-index options and stock-futures all expire.
How are benchmarks performing?
The Dow Jones Industrial Average gained 185 points, or 0.7%, at 26,259, the S&P 500 index advanced 24 points, or 0.7%, at 3,140, while Nasdaq Composite Index climbed 86 points, or 0.9%, at 10,028.
For the week, the Dow is up 3.1% for the week, the S&P 500 index has gained 3.6%, while the Nasdaq Composite Index has returned 4.7% thus far this week.
What’s driving the market?
Stock-market investors have pushed equity values higher for another week, even as reports have pointed to rising coronavirus cases in Florida, Arizona, California and Texas, which all reported record-high, single-day increases on Thursday.
Former Food and Drug Administration Commissioner Dr. Scott Gottlieb told CNBC on Thursday that the rising number of infections and hospitalizations risked going out of control for local governments.
“Investors are worried that the current coronavirus hot spots such as Texas, Florida, and many others may hamper the recovery while these individuals states continue to battle with the notion of keeping their economies open,” wrote Naeem Aslam, chief market analyst at AvaTrade, in a Friday research note.
However, the resurgence of COVID-19 cases has not deflated the buoyancy of the stock-market this week. The Dow, S&P 500 and Nasdaq Composite headed into Friday trading on pace for their fourth weekly gain in five weeks.
Stocks may be getting a boost from a report by Bloomberg that China plans to accelerate purchases of American farm goods to comply with the phase one trade deal signed in January. Beijing intends to step up buying of everything from soybeans to corn and ethanol as the economic disruption caused by the coronavirus pandemic has meant China has only reached 13% of the 2020 target under the deal in the first four months of the year.
The report on trade may help quell worries about deteriorating Sino-American relations. President Donald Trump on Thursday said in a tweet that the U.S. could completely decouple from China, a day after his top trade adviser, Robert Lighthizer, said such a move would not be a reasonable policy.
“This is one of the most forceful statements by Trump and traders are concerned about the possibility of this materializing into an actual reality,” Aslam wrote.
Friday also marks quadruple witching day for the quarter which can cause higher volumes and volatility as single-stock options, single-stock futures, and stock-index options and stock-futures all expire. About $1.8 trillion of S&P 500 options are scheduled to expire, making it the third-largest non-December expiration on record, according to data compiled by Goldman Sachs.
In economic reports, the U.S. current-account deficit, a measure of the nation’s debt to other countries, slipped 0.1% in the first quarter. The current-account deficit fell to $104.2 billion from a revised $104.3 billion in the 2019 fourth quarter. The small decline reflected a lower trade deficit in goods. The current account reveals if a country is a net lender or debtor.
Friday also will see a quartet of Federal Reserve speakers, highlighted by Chairman Jerome Powell at 1 p.m. along with Cleveland Fed President Loretta Mester. Before that, Boston Fed President Eric Rosengren speaks at 10:15 a.m., while Fed Vice Chairman for Supervision Randal Quarles speaks at noon.
Which stocks are in focus?
- Shares of Slack Technologies Inc. are off 3.8% Friday after Goldman Sachs analyst Heather Bellini downgraded the stock to sell from neutral.
- Shares of Epizyme Inc. were down 5.3% Friday, the day after it said the Food and Drug Administration had approved Tazverik as a treatment for relapsed or refractory follicular lymphoma.
- Genetron Holdings Ltd.priced its initial public offering at $16 per American depositary share, selling 16 million ADS to raise $256 million.
- Used car retailer CarMax Inc. said Friday it had net income of $4.978 million, or 3 cents a share in its fiscal first quarter to May 31, down from $266.7 million, or $1.59 a share, in the year-earlier period, weighed down by the coronavirus pandemic. Shares were down 1.7%.
- Penn National Gaming Inc. said Friday that 30 of its 41 gaming and racing properties have resumed operations after shutting down during the coronavirus pandemic. Shares surged 6.7%.
How are other assets performing?
West Texas Intermediate U.S. crude surged higher Friday, up $1.34, or 3.5%, to trade at $40.20 barrel on the New York Mercantile Exchange, following an OPEC monitoring committee meeting. The commodity is up more than 10% for the week and looking at its highest close since June 8.
The greenback declined 0.1% to 97.326, as gauged by the ICE U.S. Dollar index.
In bullion trading, August gold on Comex advanced $12.60, or 0.7%, to reach $1,743.70 an ounce.
The 10-year Treasury note yield fell 3.4 basis points to 0.73%. Bond prices move in the opposite direction of yields.
In global equities, the Stoxx Europe 600 index rose 0.9%, while the FTSE 100 index added 1.4%.
In Asia markets, China’s benchmark CSI 300 index rose 1.3%, while the Shanghai Composite Index gained 1%, and the Japanese Nikkei climbed 0.5% in Asia trade on Friday. Hong Kong’s Hang Seng advanced 0.7% and South Korea’s Kospi rose 0.4%.