U.S. equities were mixed in the final hour of trade Tuesday, as investors look for a catalyst to push indexes higher. Shares of Home Depot and Walmart gave up initial gains, despite ringing up better-than-expected quarterly results.
Investors also waited on Democrats and Republicans to make progress on another coronavirus fiscal aid package.
How are major stock indexes faring?
The Dow Jones Industrial Average DJIA, -0.16% slipped 45 points, or 0.2%, to trade at 27,799. The S&P 500 index SPX, +0.34% gained 10 points, or 0.3%, to trade at 3,393, after pushing briefly above its Feb. 19 intraday high at 3,393.52. The Nasdaq Composite Index COMP, +0.88% added 96 points to reach 11,226, a new intraday record.
On Tuesday, the Dow fell 86.11 points, or 0.3%, to end at 27,844.91, or 5.8% away from its record close. The S&P 500 rose 9.14 points, or 0.3%, closing at 3,381.99, only 0.1% away from its record closing peak at 3,386.15. The Nasdaq Composite Index added 110.42 points, or 1%, finishing at 11,129.73, while booking its 33rd record close of the year.
What’s driving the market?
Major U.S. stock indexes were mixed Tuesday afternoon, as investors took a breather after the rapid return of equity benchmarks to record territory from pandemic lows.
“Our feeling is that a good deal of the easy lifting is behind us,” said Michael Hans, chief investment officer at Clarfeld Citizens Private Wealth, after the S&P 500 index briefly carved out its first intraday record since Feb. 19.
“We have a resilient consumer, and benchmarks are back to all time highs,” he told MarketWatch, but also noted that it’s unclear what improvements in spending, the labor markets and economic activity can be sustained without ongoing monetary and fiscal support.
“The expectation is that policy will not be in place forever,” he said.
Two of the nation’s biggest retailers reported second-quarter results that beat expectations, giving stock benchmarks a temporary boost. Shares of Walmart Inc. WMT, -0.60% and Home Depot Inc. HD, -0.95% briefly surged to record territory, but gave up their gains.
Many retailers have been leveled by business closures imposed due to the COVID-19 pandemic, although Home Depot and Walmart have found some support from consumers focusing on home-improvement projects and general shopping needs. Walmart sells about 25% of all groceries bought in the U.S. and its results have been boosted by its partnership with Instacart, an internet startup, for grocery deliveries.
In economic reports, U.S. home builders began construction on homes at a seasonally-adjusted annual rate of 1.496 million in July, up 22.6% from the previous month and 23.4% from a year ago, the U.S. Census Bureau reported Tuesday, underscoring a powerful turnaround for coronavirus stricken market.
Increases in both single-family and multifamily starts contributed to the increase. Permitting activity occurred at a seasonally-adjusted annual rate of 1.495 million, up 18.8% from June and 9.4% from July 2019.
Treasury Secretary Steven Mnuchin, in a CNBC interview, said the economy is doing better as more businesses reopen, but that President Trump wants Congress to do more. “He wants us to provide money for kids and jobs, and a second round of the PPP and direct payments are a clear part of that,” he said of the Treasury’s hallmark Paycheck Protection Program to help small businesses cover payroll during the pandemic.
Meanwhile, Senate Republicans were expected to soon introduce a “skinny” coronavirus relief plan that also includes $10 billion for the U.S. Postal Service, which now sits at the heart a controversy over mail-in voting for the general elections on Nov. 3, according to several news reports. It is unclear if the new proposal will help break an impasse between the two political parties after $600 a week in extra unemployment benefits expired at the end of July.
The Republican proposal includes a $300 a week enhanced unemployment benefit, money for small business aid, and protection for employers against lawsuits stemming from Covid-19 infections, according to Bloomberg.
Several Democratic state attorneys general also said Tuesday they plan to sue the Trump administration in an effort to thwart any changes to the U.S. Postal Service that could hamper mail-in voting for the upcoming election.
Also on investors’ radar, the U.S. has imposed fresh restrictions on Huawei, after President Donald Trump again said the China technology group’s products are spyware.
Which stocks are in focus?
- Oracle Corp. ORCL, +2.06% has entered the picture as a potential buyer of TikTok, the Financial Times reported Monday night. Its shares were up 2.1%.
- Shares of Walmart Inc. WMT, -0.60% were down 0.3% after surged in premarket after the retailer produced better-than-expected second-quarter results.
- Retailer Kohl’s KSS, -14.71% also reported results that were above consensus forecast but the company didn’t provide same-store sales results due to the coronavirus closures. Shares were down more than 14%.
- Shares of Home Depot Inc. HD, -0.95% had surged in premarket trading Tuesday, after the retailer reported a fiscal second-quarter profit that rose above expectations, but turned negative in trade Tuesday.
- Shares of Advance Auto Parts Inc. AAP, +1.10% were headed 1.2% higher toward a 9-month high Tuesday, after the auto parts seller reported a fiscal second-quarter profit that was well above expectations, helped by the best same-store sales performance in nearly 10 years.
- Boeing Co. BA, -0.84% will offer its employees a second round of buyouts, the aviation giant said Monday. “While we have seen signs of recovery from the pandemic, our industry and our customers continue to face significant challenges,” Boeing said in a statement. Shares were down 0.7%.
- Carnival Corp CCL, -2.21% shares were 2.3% lower after the cruise liner said its Holland America Line division is opening bookings for the 2021 Grand Africa Voyage and 2022 Grand World Voyage.
- Tesla Inc TSLA, +3.61% shares were 3.8% higher Tuesday, putting it on track for a fifth-straight gain and third-straight record close.
How are other markets trading?
The yield on the 10-year Treasury note TMUBMUSD10Y, 0.663% was 2 basis points lower at 0.66%. Bond prices move inversely to yields.
The ICE U.S. Dollar Index DXY, -0.58%, a gauge of the buck against a half-dozen major rivals, was down 0.6% to 92.30, hanging around its lowest level since 2018.