This post was originally published on this site
U.S. stocks rose Wednesday, building on the best quarter in about 20 years, as investors took hope in positive developments from a clinical trial for a coronavirus vaccine candidate, easing worries around the rising COVID-19 tally which has threatened to stall the U.S. recovery.
Later in the session investors will parse an account of the Federal Open Market Committee’s most-recent policy-setting meeting for insights on tactics the central bank may employ to continue to limit the impact of the COVID-19 pandemic.
How are benchmarks performing?
The Dow Jones Industrial Average DJIA, +0.46% advanced 106 points, or 0.4%, to 25,919. The S&P 500 SPX, +0.46% added 10 points, or 0.3%, to 3,110. The Nasdaq Composite COMP, +0.26% rose 23 points, or 0.2%, to 10,082.
On Tuesday, the Dow gained 217.08, or 0.9%, to settle at 25,812.88, the S&P 500 index rose 47.05 points, or 1.5%, to close at 3,100.29, while the Nasdaq Composite Index added 184.61 points, or 1.9%, to end at 10,058.77, its second-highest close ever.
The Dow gained 17.8% in the second quarter, its best quarter since 1987; the S&P 500 rose nearly 20%, marking its best since 1998; while the Nasdaq Composite soared nearly 31% over the period for its sharpest quarterly return since 1999.
What’s driving the market?
Stocks rose at the session, after showing losses in premarket trading, after Pfizer Inc. PFE, +4.25% reported positive results from its Phase 1/2 clinical trial for a COVID-19 vaccine candidate. It said that all 24 participants in the trial had developed neutralizing antibodies,but the data has not been peer-reviewed.
Also bolstering investor sentiment, Automatic Data Processing Inc.’s private-sector employment report showed the U.S. added 2.37 million jobs in June. More importantly, ADP raised May’s numbers to reflect that 3.06 million jobs were, in fact, added that month, instead of a loss of 2.76 million jobs.
This puts the ADP data in line with the government data, which showed job gains in May. The Labor Department’s non-farm payrolls data for June will be published Thursday ahead of the July Fourth holiday observed on Friday.
Meanwhile, market participants will await minutes from the Federal Open Market Committee’s June 9-10, where policy makers discussed the merits of yield-curve control, a strategy of maintaining a fixed rate for yields that entails capping short- and intermediate-term debt at a desired level to help provide additional support for the market amid the COVID-19 crisis.
Fed members haven’t reached a consensus about capping yields on short-term Treasurys but some officials view the tactic as a way to underscore the Fed’s desire to keep rates lower for a longer period during the viral outbreak, the Wall Street Journal reported.
UBS strategists said that the Fed minutes should “shed more light on how the committee intends to make its (currently vague) forward guidance on rates more specific in coming meetings.” The analysts said that beyond yield-curve control, the central bank may indicate its outlook for its balance sheet, which currently stands at around $7 trillion from roughly $4 trillion at the start of the crisis.
The U.S. is now recording roughly 40,000 cases a day of coronavirus and the nation’s top infectious disease expert, Dr. Anthony Fauci warned a Senate committee on Wednesday that daily cases could hit 100,000 if people continue to flout public-health recommendations on social distancing and wearing face masks to limit the spread of the infection.
“The market’s anxiety over the daily case count is likely to continue until investors begin to treat it as background noise which will not be for some time, assuming the health care system doesn’t get overwhelmed,” said Steven Ricchiuto, chief U.S. economist for Mizuho.
The U.S. continues to lead the world, with a case tally of 2.6 million and death toll of 127,425. As a result 12 states have now paused or halted the reopening of business activity. The Financial Times reported (paywall) that some U.S. hospitals in Arizona, Florida, Texas and California were under pressure due to the strain of hospitalizations. The paper reported that Arizona reported 88% of its beds were occupied while Houston-based Texas Medical Center said its intensive care units were nearly full.
There are now around 10.5 million confirmed cases of COVID-19 world-wide and at least 512,000 people have died, according to data aggregated by Johns Hopkins University.
Before the release of Fed minutes, investors will watch for a batch of other economic reports, including a report on the manufacturing sector from the Institute for Supply Management at 10 a. m., along with a report on construction spending at the same time.
In China the economy continued to show signs of a gradual recovery. A survey of China’s manufacturing activity improved in June, underscoring the sense of improvement from out of the depths of recession. The monthly purchasing managers index issued by Caixin, rose to 51.2 from May’s 50.7, with a reading of 50 or above point to expansion. A reading for exports rose to 47 from 41.7.
Which stocks are in focus?
- General Mill’s shares GIS, -1.73% fell 2% after the company beat earnings estimates for its fiscal fourth quarter, boosted by strong demand for at-home food during the coronavirus pandemic.
- Macy’s M, -0.29% reported fiscal first-quarter results that matched Wall Street expectations. Shares of the department-store chain gained 0.7%.
- Shares of Michael Kors parent Capri Holdings Ltd. CPRI, +3.96% gained 8% after the luxury fashion group reported a fiscal fourth-quarter adjusted profit that missed expectations, while revenue fell less than forecast.
- Lemonade LMND, Insurer raised the price range for its initial public offering to $26 to $28 a pop from an earlier range of $23 to $26 each. The company is planning to sell 11 million shares, to raise would raise $308 million at the top of the range.
- FedEx shares FDX, +16.05% were up 12% after the deliveries-and-logistics company reported better-than-expected adjusted profit and sales in its fiscal fourth quarter, as the surge in online buying amid the coronavirus pandemic offset higher costs and thinner margins.
How are other assets performing?
West Texas Intermediate U.S. crude CLQ20, +0.84% for August delivery gained 54 cents, or 1.4%, to reach $39.82 a barrel on the New York Mercantile Exchange, August gold futures GCQ20, -1.32% were off $12.80, or 0.7%, to trade at $1,788.00 an ounce.
The 10-year Treasury note yield TMUBMUSD10Y, 0.689% was 2.9 basis points higher at 0.682%. Bond prices move inversely to yields.
The greenback was down marginally against a basket of its major rivals, based on trading in the ICE U.S. Dollar Index DXY, -0.06%.
In European equities, the Stoxx Europe 600 index SXXP, +0.37% was off 0.1% and London’s FTSE 100 UKX, +0.17% turned higher by less than 0.1%.
In Asian markets, the Japanese Nikkei NIK, -0.74% declined 0.8%, while South Korea’s Kospi edged 0.1% lower. China’s CSI 300 000300, +2.01% rallied 2%, while the Shanghai Composite Index SHCOMP, +1.38% advanced 1.4%.
