Dow jumps greater than 170 factors within the noon rally
U.S. stocks rose higher Tuesday as the strength of banking and industrials outweighed travel names weighed down by Covid fears.
The Dow Jones Industrial Average rose about 175 points, or 0.5%, nearly halfway through the trading day after briefly falling more than 100 points at the start of the session. The S&P 500 was up 0.4% while the Nasdaq Composite was up 0.1%. The Dow is about 0.5% from a record.
US 10-year Treasury yields stabilized on Tuesday after falling back to near 5-month lows on Monday. Oil prices were down but away from their daily lows, with West Texas Intermediate futures trading at around $ 70 a barrel.
As yields bounced back to the unchanged level from their midday decline, stocks rose slightly.
The spread of the delta coronavirus variant continued to cloud the economic outlook. The seven-day average of daily coronavirus cases in the US hit 72,790 on Friday, beating its peak last summer when the nation did not have an approved Covid-19 vaccine, according to data compiled by the Centers for Disease Control and Prevention .
The stocks of companies that would be hardest hit by new health restrictions, including airlines and cruise lines, fell Tuesday morning.
On the positive side, however, the US has hit the 70% Covid vaccine milestone, according to the CDC.
“The Delta variant of the virus is now spreading rapidly in the US and a modest decline in activity cannot be ruled out,” Solita Marcelli, CIO Americas at UBS, said in a press release. “But any possible slowdown should be dampened a bit.”
Traders on the floor of the New York Stock Exchange
A mixed day for tech stocks weighed on the broader indices, with stocks on Amazon and Facebook falling. The Dow was bolstered by health stocks like Amgen and Johnson & Johnson as investors shifted to more defensive names.
Meanwhile, earnings season continues for the second quarter, with Under Armor stocks rising nearly 5% after the company beat sales and earnings estimates. However, Clorox stock fell 11% after a disappointing report.
Simon Property shares rose 2% after the mall’s owner said sales had returned to pre-pandemic levels, 80% more than a year ago. In addition, a relatively high utilization was reported.
By Friday, 88% of the S&P 500 companies had reported a positive earnings surprise for the second quarter, the highest percentage since FactSet began collecting this metric in 2008.
“Rising earnings support valuation,” said Terry Sandven, chief equity strategist at US bank Wealth Management, in a press release. “Rising revenues and profits, generally subdued inflation, relatively low interest rates, ongoing monetary and fiscal stimulus and the medical advancement of COVID-19 support our outlook for rising US stocks in the second half of 2021.”
Investors are closely monitoring progress in Washington as lawmakers work towards a bipartisan infrastructure bill that would provide $ 550 billion for U.S. infrastructure. Senate majority leader Chuck Schumer wants to get the 2,702-page bill through the Chamber before a planned one-month break from August 9th.