This post was originally published on this site
U.S. stocks struggled to add to a fourth straight gain on Wednesday as investors contended with some evidence of a second wave coronavirus outbreak in China just as economies around the world begin to recover.
Meanwhile, investors await the second day of Congressional testimony by Federal Reserve Chairman Jerome Powell after he sounded a cautious note on economic recovery Tuesday.
How are benchmarks faring?
The Dow Jones Industrial Average DJIA, -0.06% picked up 36 points, or 0.1%, to 26,326. The S&P 500 SPX, -0.01% rose 6 points, or 0.2%, to 3,131. Both the Dow and S&P flitted between gains and losses at the start of the session.
The Nasdaq Composite COMP, +0.38% climbed 56 points, or 0.6%, to 9,952.
On Tuesday, the Dow rose 526.82 points, or 2%, to end at 26,289.98. The S&P 500 index added 58.15 points to close at 3,124.74, a gain of 1.9%. The Nasdaq Composite Index advanced 169.84 points, or 1.8%, to end at 9,895.84.
All three benchmarks extended their win streak to three straight sessions, but finished below their best levels of the day.
What’s driving the market?
Investors are attuned to fresh outbreaks of the coronavirus in China and rising cases in the U.S. as most states restart business activity, but the market focused on signs of economic recovery amid some progress on developing therapeutic drugs and vaccines against COVID-19.
“Equity markets are showing modest gains this morning as the bullish sentiment from yesterday is lingering,” wrote David Madden, market analyst at CMC Markets UK, in a Wednesday research note.
China canceled flights to and from Beijing, restricted movement of people, and closed schools in the capital city, after 137 new cases were reported in recent days. The fresh outbreak may have originated from Xinfadi, a produce market in the southern part of the city, Reuters reported.
Meanwhile, Arizona, Florida, Oklahoma, Oregon and Texas all saw record increases in new cases on Tuesday, while hospitalizations in Texas, Nevada and Florida hit records, according to Reuters.
However, investors still believe that the economic data may point to a so-called V-shaped, or quick recovery from the current recession, and the report from the U.K. of successful outcomes from a steroidal treatment that has helped prevent deaths in severe cases of COVID-19. Better-than-expected U.S. retail-sales numbers on Tuesday, showing that sales jumped by 17.7% in May, outpacing forecast for an 8.5% increase, also has helped support the market.
Read:Retail sales gains in May may fade once government stimulus money runs out, experts say
“The pandemic is still playing on traders’ minds but there is hope that dexamethasone—a low-dose steroid, might turn out to be a useful treatment. The drug is relatively cheap and there are large supplies available,” Madden said.
In U.S. economic news, housing starts rose 4.3% in May to an annualized pace of 974,000 from a five-year low of 934,000. But economists polled by MarketWatch had forecast starts to rise to a 1.13 million.
Meanwhile, Powell will continue to testify before Congress on monetary policy on Wednesday, and is scheduled to speak before the House Financial Services Committee at noon Eastern time. On Tuesday, he told the Senate Banking Committee that a full economic recovery is unlikely “until the public is confident that the disease is contained.”
Which stocks are in focus?
- Tempur Sealy International Inc.’s stock TPX, +3.23% was flat after the mattress company said that its orders rebounded in May.
- Shares of Southwest Airlines Co. LUV, -1.36% were down 2% even after the air carrier increased its revenue outlook and said it sees capacity improving in July.
- Facebook FB, -0.84% is launching a widespread effort to boost U.S. voter turnout and provide authoritative information about voting. The social media company’s stock was down 0.3%.
- United States Steel Corp. X, -5.15% were down 2% after the company said it expected second-quarter losses to be much severe than projections.
- More companies were issuing debt on Wednesday, following the Fed’s announcement that it would start buying individual corporate bonds on Tuesday. Abercrombie & Fitch Co., Energizer Holdings Inc., Merck & Co. and Eldorado Resorts Inc. are among the companies selling bonds.
- Oracle ORCL, -4.10% slipped after reporting fiscal fourth-quarter net income of $3.11 billion, or 99 cents a share, compared with $1.07 a share in the year-ago period. Revenue declined to $10.44 billion from $11.14 billion in the year-ago quarter.
How are other assets performing?
West Texas Intermediate U.S. crude CLN20, -1.19% traded lower early Wednesday, trading off 54 cents, or 1.5%, at $37.83 a barrel on the New York Mercantile Exchange after a 3.4% surge on Tuesday.
The greenback traded up 0.1% to 97.062, as gauged by the ICE U.S. Dollar index DXY, +0.22%.
Check out: ‘The dollar is going to fall very, very sharply,’ warns prominent Yale economist
In precious metals, with August gold GCM20, -0.68% on Comex retreated $7.70, or 0.4%, to trade at $1,728.80 an ounce, relinquishing all of the previous day’s gains and then some.
The 10-year Treasury note yield TMUBMUSD10Y, 0.743% edged down a basis point to 0.74%. Bond prices move in the opposite direction of yields.
In global equities, the Stoxx Europe 600 index SXXP, +0.84% traded 0.7% higher, after a 2.9% gain on Tuesday, while the FTSE 100 index UKX, +0.48% climbed 0.6%, following its 2.9% surge.
In Asia markets, China’s benchmark CSI 300 index 000300, +0.07% closed less than 0.1% higher, following a 1.5% rally on Tuesday, while the Shanghai Composite Index SHCOMP, +0.14% edged up 0.1% after its rose 1.4% on Tuesday, and the Japanese Nikkei NIK, -0.56% shed 0.5% in Asia trade on Wednesday after a powerful 4.9% rally in the prior session. Hong Kong’s Hang Seng HSI, +0.56% climbed 0.6%, added to its 2.4% gain on Tuesday and South Korea’s Kospi picked up 0.1% after its 5.3% advance a day ago.
