Market Snapshot: Dow up more than 200 points and Nasdaq carves out fresh intraday record as Apple, Netflix power to new high

On Monday, the Dow advanced 153.50 points, or 0.6%, to end at 26,024.96. The S&P 500  rose 20.12 points, or 0.7%, to finish at 3,117.86, while the Nasdaq picked up 110.35 points, or 1.1%, closing at a record high of 10,056.47, while booking its seventh day in a row of gains and clinching its longest win streak since Dec. 26, 2019, according to Dow Jones Market Data.

What’s driving the market?

Early signs of economic recovery have driven U.S. stock prices higher in recent weeks, as business activity resumes after the lockdowns imposed to combat the coronavirus pandemic, but rising COVID-19 cases, the sensitivity of the market to China-U.S. trade developments and the concentration of technology-related companies propelling the market higher are drawing increased attention on Wall Street.

Dr. Anthony Fauci, the nation’s top infectious disease expert, warned on Tuesday that the “next couple of weeks are going to be critical” in terms of the addressing a “disturbing surge” in COVID-19 cases across the United States, while also vowing to ramp up, not slow down, testing for the virus, in testimony before Congress on the federal response to the pandemic.

“To my knowledge, none of us have ever been told to slow down on testing,” Fauci said, in response to a question posed during the hearing, after President Trump claimed during a weekend rally in Tulsa, Okla. that he asked for a slowdown. “It’s the opposite,” Fauci said. “We’re going to be doing more testing, not less.” Fauci also reiterated that he feels cautiously optimistic about the prospects for the development of a vaccine by year end or early 2021.

“What’s driving the market right now is guarded optimism around the COVID situation becoming more tolerable, or livable, and a de-escalation of the alarm that rising cases had set off on the past,” said Tony Roth, Wilmington Trust’s chief investment officer, in an interview with MarketWatch.

“I don’t know if that’s going to be the case, or not, but that certainly is what’s driving the market,” he said.

Read: Infectious-disease expert says we’re thinking too much about a second wave of COVID-19 when it’s really more like a forest fire

U.S. equity and debt markets also have been bolstered by trillions worth of monetary and fiscal stimulus aimed at blunting the economic shocks created by the pandemic.

St. Louis Fed President James Bullard said Tuesday that companies are taking on more debt to stay in business during the health and economic crisis, but that he doesn’t see dangerous asset bubbles forming.

in U.S. economic data, IHS Markit’s preliminary, composite purchasing manager’s index rose to 46.8 in June from 37 in May, highlighting a nascent economic recovery. The data showed the services sector index rose to 46.7 in June from 36.9 in May, and the manufacturing index recovered to 49.6, compared with 39.8. While the indexes are still below the 50 level, suggesting a contraction, they are steadily improving.

Similar data showed an improvement in the eurozone. The purchasing managers composite index for the eurozone—a measure of activity in the manufacturing and services sectors—rose to 47.5 in June from 31.9 in May to reach its highest level since February, the month before lockdowns began in Europe.

New U.S. new home sales also increased 16.6% in May to 676,000 annual rate, compared with estimates for a gain 632,000.

Treasury Secretary Steven Mnuchin on Tuesday said he expects China to uphold its end of the trade agreement it struck with Washington, in a statement, while also saying he anticipates a new round of coronavirus stimulus to pass Congress in July.

Earlier, markets got a jolt of late-night volatility after Trump administration trade adviser, Peter Navarro, in a Monday evening interview on Fox News, said the China trade deal was “over.” Minutes later, the adviser said that his comments were “taken wildly out of context.” Trump also said via Twitter Monday night that the China trade was “fully intact.”

Meanwhile, the Nasdaq Composite’s advantage over the Dow and S&P 500 is the biggest since 1983, while the divergence between the S&P 500 and the Dow is widest since 2002, according to Dow Jones Market Data, highlighting the strength of a handful of stocks, including Apple AAPL, +2.49%, Microsoft M, +0.81%, Facebook FB, +1.52%, Amazon.com AMZN, +2.00%, and Google-parent Alphabet GOOGL, +0.94% GOOG, +0.95%.

Which stocks are in focus?

• American Airlines Inc. AAL, -5.19% raised nearly $2 billion on Tuesday, partially through an offering of 74.1 million shares at $13.50 a share on Tuesday, as it moves to raise cash and bolster its liquidity position during the coronavirus pandemic. The airline also priced an offering of $1 billion of convertible bonds that mature in 2025 at 6.50%. Shares were off 6.3% Tuesday.
• Shares of Palatin Technologies Inc. PTN, +19.42% said it would test one of its investigational drugs as a treatment for COVID-19. Shares surged nearly 21%.
• Netflix Inc NFLX, -0.29% shares are headed for a record close Tuesday, and on track to clinch its longest win streak in 2.5 years.
• Apple Inc. shares AAPL, +2.49% headed 3% higher for a fresh record on Tuesday after its World Wide Developers Conferencewhere the company announced new operating systems for its iPhones and computers and said it would use its own chips when building new Mac computers, ditching Intel’s in the process.
• Starbucks Corp. SBUX, +0.29% said Tuesday that it will launch its summer menu in the U.S., which will include the Impossible Breakfast Sandwich. Shares gained 0.6%.
• Greenwich LifeSciences GLSI, set terms for its planned initial public offering on Tuesday, with plans to offer 1 million share priced at $7.50 to $8.50 a pop.
• Aurora Cannabis Inc. ACB, -1.38% shares fell 0.4% Tuesday, despite Cantor Fitzgerald raising its price target to C$29 from C$27 for the Canadian pot company, after it outlined a new set of cost cuts, including cutting its corporate staff by 25% over six months.
• Electronic Arts Inc. EA, +0.94% shares rose 1.5% Tuesday, a day after the company said in a call that results for its fiscal first quarter results ending June were on pace to clock in much better than the company originally forecast.
• Snap Inc. SNAP, +1.67% shares rose 2.4% Tuesday, putting it on track for its longest wining streak on record and highest close in about three years.
• Albertsons Companies, Inc. has filed paperwork to go public. The grocery-store chain plans to raise up to $1.3 billion and under the ticker “ACI” on the New York Stock Exchange.

How are other assets performing?

West Texas Intermediate U.S. crude CLQ20, -1.39% fell 36 cents, or 0.9%, to end at $40.37 a barrel on the New York Mercantile Exchange. In precious metals, gold futures closed near an 8-year high, with the August contact GCM20, +1.01% gaining $15.60, or 0.8%, to settle at $1,782 an ounce, the highest price for the most-active contract since Oct. 4, 2012.

The 10-year Treasury note yield TMUBMUSD10Y, 0.718% rose 1 basis points to 0.72%. Bond prices move inversely to yields.

The greenback was down 0.4% against basket of its major rivals, based on trading in the ICE U.S. Dollar Index DXY, -0.38%.

In global equities, the Stoxx Europe 600 index SXXP, +1.29% closed 1.3% higher, while the FTSE 100 index UKX, +1.20% advanced 1.2%.

In Asian markets, China’s benchmark CSI 300 index 000300, +0.48% gained 0.4%, the Japanese Nikkei NIK, +0.49% picked up 0.5% lower, Hong Kong’s Hang Seng HSI, +1.61% gained 1.6%, and South Korea’s Kospi index 180721, +0.21% inched up 0.2%.