Market Snapshot: Dow rises 200 points, Nasdaq trades at record ahead of 4th of July holiday, after strong employment data

All three benchmarks were off their best levels of the session, which came near the start of Thursday’s trading action.

For the holiday-shortened week, the Dow is set for a 3.5% gain, the S&P 500 is on pace to return 4.2%, while the Nasdaq Composite Index was aiming for a 6.6% weekly return, at last check.

What’s driving the market?

The U.S. added 4.8 million jobs in June compared with expectations for a rise of 3.7 million and the unemployment rate fell for the second straight month to 11.1%, but the economy’s recuperation from the coronavirus might already be suffering a setback from a renewed surge in cases.

Millions of Americans have returned to work since states began to reopen business activity in May, but the economy has a long way to go to get back to normal. The U.S. lost more than 22 million jobs during the height of the pandemic and only restored 7.5 million of them in the past two months.

Meanwhile, in weekly data also published Thursday new applications for traditional jobless benefits continued to slow, falling to 14.3 million in the seven days ended June 27 from 1.48 million in the prior week. However, the number of people receiving traditional jobless benefits rose 59,000 in the week ended June 20 to 19.29 million.

“June’s further 4.8 million jobs, added to the 2.5 million unexpectedly added in May, has turbocharged investor sentiment, both for US equities and the dollar,” said Ulas Akincilar, head of trading at the online trading platform INFINOX.

However, the U.S. saw 52,000 new COVID-19 cases Wednesday, according to data compiled by Johns Hopkins University, a new one-day record in the U.S. and some states have had to close down business activity again as a result.

Katie Nixon, chief investment officer at Northern Trust Wealth Management, said that the spike in cases has changed the behaviors of companies like Apple, who announced that it was re-closing more stores on Wednesday, which has sparked a mini rotation into stocks that are viewed as “stay at home” names, which may benefit during extended lockdowns to limit the viral spread.

“Of course, we now know that reopening plans have been changed, with many states and cities reversing course. At the same time, and regardless of what authorities are recommending, we see companies (like Apple) and consumers changing their plans and slowing down,” Nixon said.

“This has led to a ‘re-rotation’ of sorts back to the stocks that proved resilient in a ‘stay at home’ environment,” she said.

If June’s market ups and downs felt like a Ping-Pong match, that is because it marked a market consolidation phase, said Katie Stockton, market technician and founder of Fairlead Strategies.

The selloff in early June, followed by a few weeks of consolidation, was “healthy, as it relieved overbought conditions,” Stockton said in an interview. “We’re getting a bit more constructive now, though there’s still what I would consider to be a healthy level of skepticism out there. That can fuel an uptrend whether it makes sense fundamentally or not.“

Look for headlines and sentiment to drive the market from here on, Stockton said, since investors feel like “we don’t have any visibility into the fundamentals of the economy.”

To that end, the market did see some softening of bullishness on Thursday after a report indicated that a final-stage trial of a Moderna coronavirus candidate was delayed, according to a report from STAT News, citing people familiar.

And the market appeared to weaken earlier in the session after Reuters reported that Florida shattered records on Thursday when it reported over 10,000 new coronavirus cases, the biggest one-day increase in the state since the pandemic started.

In other economic reports on Thursday, a reading of factory orders showed a 0.8% rise in May, the first in three months.

Which stocks are in focus?

• Shares of Tesla Inc. TSLA, +8.27% jumped 7% after a Wedbush analyst boosted his stock price target to $2,000.
• PayPal Inc. shares PYPL, +0.23% were 0.2% higher in early morning action after an analyst upped his stock price target to $200 from $176.
• Alexion Pharmaceuticals Inc. ALXN, -0.02% shares slipped 0.1% after the Securities and Exchange Commission said the company would pay $21 million to resolve charges that it paid Russian and Turkish officials to promote its immunosuppressive drug Soliris.
• Shares of Alaska Air Group Inc. ALK, +2.63% rose more 2% after the airline said it had secured $1.2 billion in private funding.
• Shares of Moderna Inc. MRNA, -4.72% were trading 5.7% after the STAT News report.
• Shares of Lemonade Inc. LMND, +136.46% , the insurance company, were up 134% in its public debut on the New York Stock Exchange Thursday.

How are other assets performing?

West Texas Intermediate U.S. crude CLQ20, +1.20% for August delivery settled at $40.65 a abrrel on the New York Mercantile Exchange, up 2.1%, in part thanks to dwindling inventories. In precious metals, August gold futures GCQ20, +0.43% rose $10.10, or 0.6%, to finish at $1,790 an ounce.

The 10-year Treasury note yield TMUBMUSD10Y, 0.673% was down 1.6 basis points at 0.666% after the strong jobs report pushed investors into riskier assets. Bond prices move inversely to yields.

The greenback fell 0.1% against a basket of its major rivals, based on trading in the ICE U.S. Dollar Index DXY, +0.05%.

In European equities, the Stoxx Europe 600 index SXXP, +1.96% closed 2% higher, and London’s FTSE 100 UKX, +1.33% finished with a 1.3% gain.

In Asian markets overnight, the Japanese Nikkei NIK, +0.11% edged up 0.1%, Hong Kong’s Hang Seng HSI, +2.85% throttled nearly 3% higher, and the Shanghai Composite Index SHCOMP, +2.13% closed up 2.1%.

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