U.S. stocks rose Tuesday for a second day as investors took heart from the easing of businesses restrictions in the U.S. and Europe and progress toward an early vaccine to prevent the further spread of the COVID-19 pandemic.
Investors also were encouraged by rising crude oil prices rise and looking to corporate earnings for an outlook on the pandemic, with Disney’s results in focus after the close.
How are the benchmarks faring?
The Dow Jones Industrial Average DJIA, +1.56% gained 359 points, or 1.5%, at 24,108, the S&P 500 index SPX, +1.86% advanced 50 points at 2,893, a gain of 1.8%, while the Nasdaq Composite index COMP, +2.12% climbed 179 points, or 2.1%, at 8,890.
On Monday, the Dow managed a gain of 26.07 points, or 0.1%, to end at 23,749.76, and the S&P 500 gained 12.03 points, or 0.4%, finishing at 2,842.74, with both benchmarks erasing declines of more than 1% for their sharpest intraday reversals since March, according to Dow Jones Market Data. The Nasdaq Composite rose 105.77 points, or 1.2%, closing at 8,710.7.
What’s driving the market?
U.S. stocks looked to extend gains that began late Monday as investors dismissed reports on growing tensions between China and the U.S. and continued to focus on the path for U.S. businesses to slowly reopen after a period of stultifying coronavirus lockdowns.
California Gov. Gavin Newsom on Monday said clothing stores and a number of other retailers could open for curbside pickup starting Friday, while a number of states are slowly attempting to unwind measures put in place to limit the COVID-19 disease.
“California is considering a roll out of reopenings,” Diane Jaffee, senior portfolio manager at TCW told MarketWatch. “It’s literally a juggernaut of U.S. GDP. That’s a big deal.”
New York Gov. Andrew Cuomo on Tuesday reiterated his call for federal aid for New York, the epicenter of the pandemic, a day after he outlined a pathway to reopening parts of his state, while also stressing that such decisions boil down to how much a human life is worth. “Let’s be honest and tell people it’s a trade off,” he said of the economic and human toll.
Stocks also were helped by a rebound in oil prices which were up more than 19% for the U.S. benchmark West Texas Intermediate crude for June delivery CL.1, +19.47% CLM20, +19.47%, as a number of debt-laden producers started to cut production amid a glut of oil and a slump in demand during the pandemic.
“We’re seeing an increase in oil demand,” Kent Engelke, chief economic strategist at Capitol Securities Management told MarketWatch, adding that oil is a commodity that “symbolizes economic activity.”
In Germany, state premiers are set to agree on measures to further ease restrictions on business in a teleconference with Chancellor Angela Merkel on Wednesday, according to a Reuters report, while Hong Kong leader Carrie Lam also is moving to loosen curbs on businesses and to allow schools to reopen starting May 27.
Meanwhile, the Wall Street Journal reported that researchers at New York University and the University of Maryland School of Medicine said Tuesday they began injecting people with the first of four vaccine candidates from Pfizer Inc. PFE, +3.01% and Germany’s BioNTech BNTX, +7.79%.
The tests are the most recent efforts in the search for a cure for the disease that has infected more than 3.6 million globally and claimed more than a quarter of a million lives since emerging in Wuhan, China in December, according to data compiled by Johns Hopkins University.
“It seems like every day another company is coming out with clinical testing on a potential vaccine,” Engelke said.
After the close Tuesday, investors will focus on some of the winners and losers of the viral outbreak, with Walt Disney & Co. DIS, -1.32% set to provide an early look at how theme-park closures, film delays and a lack of live sports has impacted its business.
Results from Electronic Arts Inc. EA, +2.40% and Activision Blizzard Inc. ATVI, +2.89% videogame makers that have prospered amid stay-at-home protocols, will also be eagerly watched in the 4 p.m. Eastern hour. Meanwhile, earnings from alternative-meat maker Beyond Meat Inc. BYND, +4.61% will come as the meat supply-chain is being hammered by workers sickened by the viral outbreak and a decline in purchases from restaurants and big buyers.
On the economic front, trade data showed the U.S. deficit soaring 12% as the coronavirus epidemic dealt a severe blow to American exporters. Survey data on the services sector from the Institute for Supply Management showed it crashing to recession levels in April, though the reading of 41.8% was better than the consensus forecast.
Chicago Fed President Charles Evans said its safe to assume some economic growth could resume in the second quarter, but to also brace for more pessimistic outcomes, while speaking on a call with reporters.
Which other stocks are in focus?
- Shares of Hertz Global Holdings Inc. HTZ, -15.32% were down more than 16% after the Wall Street Journal reported that the car rental company has hired an additional adviser to help with an imminent bankruptcy filing.
- Shake Shack Inc. SHAK, -4.95% saw its shares fall after it said it was seeing higher beef prices amid closures due to the COVID-19 pandemic. The company also reported a loss of $1.1 million, or 3 cents a share, compared with net income of $3.6 million, or 9 cents a share, in the year-ago quarter.
- Starbucks Corp.’s stock SBUX, +2.86% rose after the coffee giant announced plans to reopen more than 85% of its U.S. stores by the end of this week.
- Shares of DuPont de Nemours Inc. DD, +0.73% were up after the materials and ingredients company reported a first-quarter adjusted profit and sales that topped expectations, as the COVID-19 pandemic helped boost the personal protection, water filtration, electronics and probiotics and food and beverage businesses.
- United Airlines Holdings Inc. UAL, -1.82% expects to shrink its management and administrative ranks by at least 30% starting in October.
- AMC Networks Inc. AMCX, -0.46% said it expects the COVID-19 pandemic to have a material impact on its results.
- Shares of Wayfair W, +27.73% surged 25% Tuesday, after the home and office furniture retailer reported deepening losses in the first quarter.
- Toy maker Mattel Inc. MAT, +1.45% Arconic and Pinterest PINS, -0.28% also will report results on Tuesday.
How are other markets trading?
West Texas Intermediate crude oil for June delivery CLM20, +19.47% CL.1, +19.47% rose Tuesday as easing state lockdowns fueled hope for higher oil prices, with crude gaining $4.10, or 20.11%, to $24.49 a barrel on the New York Mercantile Exchange.
Meanwhile, MarketWatch’s PetroCurrency Index MWPC, -0.64%, which measures the U.S. dollar against a basket of currencies weighted according to their share of global oil output as compiled by the U.S. Energy Information Administration, was down 0.5% at 235.27.
The U.S. dollar, meanwhile, was up 0.3% against a basket of a half-dozen currencies as gauged by the ICE U.S. Dollar Index DXY, +0.25%.
In precious metals, the price of an ounce of gold for June delivery GCM20, retreated $2.00 or 0.1%, to trade at $1,711.10 an ounce.
The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, 0.649% rose 1 basis points to 0.65%, as markets weighed the U.S. Treasury’s plans to borrow a record $3 trillion in the second quarter.
In Asia overnight, stocks closed mostly lower, as the Hang Seng Index HSI, +1.07% rose 1.2%, recovering a portion of its more than 4% drop from Monday. Markets in Japan, Korea and China are closed for holidays.
In Europe, stocks closed higher with the Stoxx Europe 600 SXXP, +2.15% gaining 2.2%, and the FTSE 100 UKX, +1.66% up 1.7% on Tuesday.
Chris Matthews contributed reporting
Add Comment