U.S. stock benchmarks saw opening losses fade and the Nasdaq Composite notch an intraday record as markets appeared to respond to better-than-expected economic data, a day after a solid rally in shares of technology and e-commerce companies propelled the market to a solid advance to start August trade.
Investors also trained their attention on company earnings reports and negotiations between Democrats and Republicans in Congress over a new round of coronavirus relief for Americans that have been put out of work due to the COVID-19 pandemic.
How are equity benchmarks performing
The Dow Jones Industrial Average picked up 9 points, or less than 0.1%, at around 26,681, while the S&P 500 index inched up 2 points, or 0.1%, to around 3,297, but had hit a round-number level at 3,300. The Nasdaq Composite Index rose 21 points, or 0.2%. at 10,922 and had hit an intraday peak at 10,940.50, marking a fresh intraday record.
On Monday, the Dow climbed 236.08 points, or 0.9%, to close at 26,664.40. The S&P 500 rose 23.49 points, or 0.7%, to 3,294.61. The Nasdaq Composite gained 157.52 points, or 1.5%, to close at 10,902.80.
What’s driving the market?
Market participants were watching incremental progress between Democrats and Republicans over a fiscal relief package that could deliver trillions of dollars more to Americans that have lost their jobs amid the worst pandemic in generations, with a resolution looking unlikely until next week at the earliest.
Late Monday, Treasury Secretary Steven Mnuchin said that Republicans had “made a little progress” in two-hour discussions to resolve differences, while Senate Minority Leader Chuck Schumer said progress was made on providing funding for school safety during the epidemic, but impasses remain on issues including state and local aid and the extension of supplemental insurance for the unemployed. There is a “desire to get something done as soon as we can,” Schumer said, speaking to reporters.
Talks have dragged on as the federal unemployment benefits of $600 a week have expired, as has a federal moratorium on evictions. There is growing talk that a deal won’t be reached until September.
Central bankers on Monday said that the talks in Congress represent an important part of avoiding a deeper recession.
“The ball is in Congress’ court,” Chicago Federal Reserve President Charles Evans told reporters in summarizing the current state of economic policy. “Fiscal policy is really fundamental for getting us going,” he said.
Markets got a slight lift after a reading of U.S. factory orders rose 6.2% in June to mark the second increase in a row, pointing to a steady rebound after widespread shutdowns in the early stages of the pandemic. Economists polled by MarketWatch had predicted a 4.6% increase.
Colin Cieszynski, chief market strategist at SIA Wealth Management said that he expected muted action on Tuesday as investors digest corporate earnings reports and developments in Washington ahead of the important monthly employment report due on Friday.
“US markets have paused this morning while investors consider this week’s developments so far and catch their breath while waiting for a large amount of scheduled news due later in the week,” he said in a Tuesday research note.
Which stocks are in focus?
- Ralph Lauren Inc. stock fell 6.2% Tuesday after the luxury lifestyle brand reported fiscal first-quarter revenue that missed expectations.
- Shares of Abiomed Inc. edged 0.3% higher on Tuesday after the company said its Impella heart pump had received an emergency use authorization from the Food and Drug Administration as a treatment for some COVID-19 patients.
- Travel firm Booking.com said it would cut 25% of its workforce as a result of the COVID-19 pandemic. Shares were off 0.2% early Tuesday.
- KKR & Co. on Tuesday said its second-quarter profit rose year over year, marking a recovery for the asset-management company. Its stock was down 0.6%.
- Ford announced that CEO Jim Hackett was retiring Oct. 1.
- Space-tourism company Virgin Galactic Holdings says it entered into deposit agreements with a dozen new customers, plans to sell more than 20 million fresh shares. Shares tumbled 12%.
- Market participants are awaiting quarterly results from Walt Disney & Co. after the close of regular trade on Tuesday. Disney shares traded 0.5% higher.
- Alternative-fuel truck marker Nikola Corp. will report later Tuesday. Its stock gained 0.6%.
- Dating platform Match Group Inc. is scheduled to report its results after the closing bell. Shares were trading 2.1% lower Tuesday.
- Alternative meat maker Beyond Meat is set to report its earnings in the after hours. Its stock gained 1.2%.
How are other markets trading?
The 10-year Treasury note yield fell 3.4 basis points to around 0.528%. Bond prices move inversely to yields.
European equity markets were trading mostly lower. The Stoxx Europe 600 index declined 0.5%, and the FTSE 100 lost less than 0.1%.
In Asian trade Tuesday, China’s CSI 300 index gained less than 0.1%, the Shanghai Composite Index inched 0.1% higher. Japan’s benchmark Nikkei index climbed 1.7% after a 2.2% gain on Monday.
In other assets, the greenback rose, with the ICE U.S. Dollar index jumping 0.2%.
Crude futures fell with West Texas Intermediate oil declining 1%, or 41 cents, to $40.60, on the New York Mercantile Exchange Gold futures for December rose $5.70, or 0.3%, at $1,992 an ounce.