Major U.S. stock indexes traded higher Monday afternoon, as investors look forward to quarterly results from corporations over the coming days.

Investors also focused on positive developments from coronavirus vaccine candidates.

How are benchmarks performing?

The Dow Jones Industrial Average
US:DJIA
rose 22 points, or 0.1%, to 26,694, reversing morning losses. The S&P 500
US:SPX
rose 19 points, or 0.6%, to 3,243. The Nasdaq Composite
US:COMP
gained 226 points, or 2.2%, to 10,729.

The Dow last week logged a 2.3% gain, the S&P 500 advanced 1.3%, and the Nasdaq Composite Index lost 1.1%.

What’s driving the market?

Wall Street is kicking off a busy week of corporate earnings, while U.S. coronavirus cases and deaths continue to reach records. Monday’s market action also underscores why a significant rotation away from high-flying technology stocks to cyclical sectors might hinge on what major corporations have to say about the health of the economy in the coming days.

“Obviously, this week it’s all about earnings,” said John Ham, an associate advisor at New England Investment & Retirement Group, in an interview. “There’s been a lot of enthusiasm for the large-cap tech space,” he said, adding that any significant burst higher for stocks, beyond the clutch of technology-driven names, might require the support of “actual money managers,” where there’s still “a lot of people sitting on the sidelines.”

Earnings from corporations including Microsoft
US:MSFT,
US:TSLA
and Intel
US:INTC,
are among a parade of entities that could offer greater insight about the economic outlook as American corporations contend with the worst pandemic in more than 100 years.

See: Is the ‘great rotation’ in the stock market under way as coronavirus cases surge? Or is it a false dawn? Here’s what experts think

North Carolina, Louisiana and Kentucky reported record infections of COVID-19 of 2,400, 3,119 and 979 respectively on Sunday, The Wall Street Journal reported, while Arizona registered a record high death tally of 147 deaths.

Meanwhile, Florida, the epicenter of the outbreak in the U.S., reported nearly seven-day average of 12,000 cases, surging by nearly a 30%, according to CNBC, citing data compiled by Johns Hopkins University.

The escalation of the deadly pandemic in the U.S. is diminishing hopes for a V-shaped, or quick and strong, economic recovery from the pandemic, as the virus taxes the public-health systems of some states and municipalities and forces local officials to restore lockdown measures to limit a more severe outbreak.

“Renewed outbreaks in the U.S. highlight the reality that a return to normal economic activity may be very difficult, if not impossible, without a widely available cure/vaccine. As a result, markets are likely to remain sensitive to developments from this leading vaccine candidate,” said Jason Pride, Chief Investment Officer of Private Wealth at Glenmede.

Shares of AstraZeneca
US:AZN
fell 3.5% even after the drugmaker and the University of Oxford’s said its Phase 1 clinical trial data for the COVID-19 vaccine candidate showed promising results. The results were published Monday in The Lancet medical journal.

BioNTech
US:BNTX
and Pfizer Inc.
US:PFE
said their experimental COVID-19 vaccine produced antibodies in people participating in a Phase 1/2 clinical trial in Germany.

Market participants also are watching developments around the potential for additional stimulus here and in the U.S., with the European Union leaders in Brussels negotiating an unprecedented €1.85 trillion ($2.1 trillion) budget and coronavirus recovery fund to tackle the crisis.

EU leaders were said to be close to a rescue package after four governments — Austria, Netherlands, Denmark and Sweden — known as the frugal four, appeared close to agreeing to a split between grants and loans that had stalled talks over the weekend, according to Bloomberg News, citing officials familiar with talks.

Meanwhile, returning Washington lawmakers will aim to draft an additional rescue package of their own, with a group, including Senate Majority Leader Mitch McConnell and Treasury Secretary Steven Mnuchin set to meet in the White House to discuss a proposed $1 trillion package, which is lower than the $3.5 trillion proposed by Senate Democrats. House Speaker Nancy Pelosi, D-Calif., already pushed through a more sweeping $3 trillion relief bill to bolster virus testing, keep aid flowing and set new health and workplace standards for reopening schools, shops and workplaces.

Read:With clock ticking, lawmakers set to begin fight over next round of coronavirus aid

Which stocks are in focus?
  • Shares of Noble Energy Inc.
    US:NBL
    climbed 5.2%, after Chevron Corp.
    US:CVX
    confirmed an all-stock deal to buy the oil-and-gas producer for about $5 billion. Including Noble’s debt, the deal would be valued at about $13 billion. The deal was earlier reported by The Wall Street Journal. But Chevron’s shares fell 1.4%.
  • Briggs & Stratton Corp.
    US:BGG
    said Monday it has filed for chapter 11 bankruptcy and reached an agreement to sell most of its assets to KPS Capital Partners.
  • Shares of Halliburton Co.
    US:HAL
    rose 3%, after the oil-services company reported a surprise second-quarter adjusted profit but revenue that fell short of expectations.
  • Cal-Maine Foods Inc.
    US:CALM
    said Monday it had net income of $60.5 million, or $1.24 a share, in its fiscal fourth quarter to May 30, after a loss of $19.8 million, or 41 cents a share, in the year-earlier period. Its shares were down 1.6%.
  • Walt Disney Co.
    US:DIS
    has “dramatically” slashed its advertising budget on Facebook
    US:FB
    and Facebook-owned Instagram, according to a report in the Wall Street Journal. The entertainment giant’s shares fell 0.4%.
  • Ant Group Co., the Chinese technology and financial-services giant that owns popular mobile-payments network Alipay, said it is planning IPOs in Hong Kong and Shanghai, WSJ reported.
  • Shares of Dollar Tree Inc.
    US:DLTR
    rose 1.7% after the discount-store chain appointed a new CEO on Monday.
How are other markets trading?

The STOXX 600 Europe index
XX:SXXP
finished up 0.8%, while the U.K.’s FTSE
UK:UKX
fell 0.5%. In Asia, the Nikkei
JP:NIK
eked out a small gain, while China’s CSI 300 gauge
XX:000300
surged nearly 3%.

Gold futures
US:GCQ20
rallied $8, trading up 0.5%, to $1,818 an ounce, on the New York Mercantile Exchange. August futures for the U.S. crude benchmark
US:CLQ20
were virtually unchanged at $40.58 a barrel.

The 10-year Treasury note yield
BX:TMUBMUSD10Y
was down a basis point to 0.618%. Bond prices move in the opposite direction of yields.

In currency markets, the dollar weakened 0.1% against its six major rivals based on trading of the ICE U.S. dollar index.
US:DXY

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2020-07-20