Nasdaq Composite flips into negative territory in early Monday action; Boeing leads Dow higher
U.S. stocks mostly rose at the start of Monday trade as Wall Street equities aimed to extend a rally that briefly lifted the Nasdaq Composite to new intraday record amid hopes that the gradual easing of lockdown measures was proving successful and fostering appetite for risk assets.
How are benchmarks faring?
The Dow Jones Industrial Average US:DJIA climbed 241 points, or 0.9%, to 27,351. The S&P 500 US:SPX rose 10 points, or 0.3%, to 3,204. Meanwhile, the tech-heavy Nasdaq Composite US:COMP lost 5 points, or less than 0.3%, to 9,808, after briefly carving out a new intraday all-time record at 9,847.16.
On Friday, the Nasdaq ended 3.1 points shy of its Feb. 19 record closing high. The Nasdaq-100 US:NDX, meanwhile, rose 194.73 points, or 2% to 9,824.39, marking a record finish, but was off 0.4% on Monday at 9,792.
For the week, the Dow finished 6.8% higher, the S&P 500 gained 4.9%, while the Nasdaq advanced 3.3% and the Nasdaq-100 rose 2.8%.
What’s driving the market?
The Federal Reserve is set to release its updated policy statement on Wednesday and its first set of economic projections since December. Although investors aren’t expecting the central bank to dial back rates, which currently stand at a range of 0% and 0.25%, investors may be eager to garner clues from policy makers after Friday’s jobs report produced a stunning 2.5 million increase in payrolls in May, when economists had expected as many as 9 million jobs lost in the month, amid coronavirus-related closures.
“Following a massive upside surprise from the May employment report, the focus will shift to the Fed’s interpretation of the latest data and potential implications for monetary policy when the FOMC convenes this Wednesday,” wrote analysts at Deutsche Bank, led by Brett Ryan, senior U.S. economist, in a research note dated June 5.
“We expect the June meeting to mark a first step away from a focus on crisis prevention toward more traditional goals of providing accommodation to support the recovery,” the researchers wrote.
Friday data showed that the U.S. May unemployment rate fell to 13.3%from 14.7%. Economists polled by MarketWatch had predicted the loss of 7.25 million jobs and a May unemployment rate of 19%.
Markets have been kept afloat and have even made significant gains, despite civil unrest and evidence of rising Sino-American trade tensions, on the back of trillions of dollars in support from the U.S. government and the Fed, whose balance sheet has ballooned to $7.21 trillion from around $4 trillion in March.
Investors have also been heartened by efforts to reopen the U.S. economy in the aftermath of pandemic-related closures. Reopening plans are in various stages in all 50 U.S. states. New York City, one of the regions hardest hit by coronavirus, was set to launch Monday the first phase of its reopening, which includes the restart of construction and limited retail operations.
Still, the Wall Street Journal reported that some states, California, Utah, Arizona, North Carolina, Florida, Arkansas and Texas, among others, are reporting an increase in the number of infections after having lifted restriction, even as the overall case tally is sliding in the U.S., citing data compiled by Johns Hopkins University.
As of early Monday, there were more than 7 million confirmed cases of the deadly infection globally, with 1.9 million infected in the U.S., according to the data.
Which stocks were in focus?
PG&E Corp. US:PCG Shares of rose 1.9% Monday, after the San Francisco-based utility announced an equity investment of a total of $3.25 billion by investors including Appaloosa, Third Point LLC, Fidelity Management & Research Co. LLC and Zimmer Partners at a discount to current prices.
Shares of Gilead Sciences Inc. US:GILD rose 1.5%, after Bloomberg reported over the weekend that U.K. drugmaker AstraZeneca PLC US:AZN made a preliminary approach regarding a potential merger, although the report said the companies weren’t in formal talks and Gilead was not currently interested in selling or merging.
Shares of oil companies were bolstered as U.S. crude prices neared $40 a barrel. Marathon Oil Corp. US:MAR was up 7.8% after the opening bell, along with a 10.4% gain in Noble Energy Inc. US:NBL
Shares of Dow component Boeing Co. US:BA surged 7.6% amid optimism around the re-openings. The most beaten-down industries have rallied sharply in recent sessions as they come back into favor again.
How are other assets trading?
Oil prices fell US:CL Monday even after OPEC+ agreed on Saturday to extend a pact to ease global output. West Texas Intermediate Crude was trading 53 cents, or 1.3%, lower at $39.03 a barrel on the New York Mercantile Exchange.
In precious metals, August gold US:GCM20 on Comex was up $11.90, or 0.7%, at $1,694.90 an ounce, after finishing Friday trade at its lowest level since April 3.
The 10-year Treasury note yield BX:TMUBMUSD10Y was little changed at 0.900%, following Friday’s surprising jobs report. Bond prices move in the opposite direction of yields.
The greenback edged higher against its major rivals, but was mostly flat, as gauged by the ICE U.S. Dollar index US:DXY.
In global equities, the Stoxx Europe 600 index XX:SXXP traded down 0.1%, while the FTSE 100 index UK:UKX rose 0.1%.
In Asia, Japan’s Nikkei JP:NIK closed 1,4% higher, the China CSI 300 XX:000300 finished 0.5% higher and Hong Kong’s Hang Seng Index HK:HSI finished flat but in positive territory. South Korea’s Kospi index KR:180721 gained 0.1%.