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Wall Street Keeps Rallying 08/05 15:48
Wall Street's big rally keeps rolling, and the S&P 500 rose for a fourth
straight day Wednesday to sit just 1.7% below its record.
NEW YORK (AP) -- Wall Street's big rally keeps rolling, and the S&P 500 rose
for a fourth straight day Wednesday to sit just 1.7% below its record.
The S&P 500 climbed 21.26 points, or 0.6%, to 3,327.77, echoing gains for
stocks across Europe and Asia. If the U.S. market has just a few more days like
that, it will erase the last of the historic losses it's taken since February
because of the coronavirus pandemic and the recession it caused.
The Dow Jones Industrial Average rose 373.05, or 1.4%, to 27,201.52, and the
Nasdaq composite added 57.23, or 0.5%, to set another record at 10,998.40.
Much of Wall Street's focus this week has been on Washington, where Congress
and White House officials are negotiating on more aid for an economy that's
shown some improvement but is still hobbling. Investors say such a package is
crucial and needs to arrive quickly, with millions of Americans still out of
work and $600 in weekly unemployment benefits from the U.S. government having
recently expired.
Treasury Secretary Steven Mnuchin said late Tuesday that the two sides set a
goal of reaching an agreement by the end of the week to permit a vote next
week, though negotiators said the two sides remain far apart on key issues.
The pressure on Washington to act quickly is mounting. A report on Wednesday
suggested that hiring was far weaker last month than economists expected.
Private employers added just 167,000 jobs, according to a survey by payroll
processor ADP, well below the 1.2 million that economists had forecast.
It highlights the damage that a resurgence in coronavirus cases across much
of the country is doing to the economy. It also puts an even brighter spotlight
on Friday's more comprehensive jobs report coming from the Labor Department.
Investors across the stock market seem to be assuming that Congress will
reach a deal sooner rather than later, as well as that the economy will
continue to improve despite the pandemic, said Willie Delwiche, investment
strategist at Baird.
"If either one of those gets challenged, then you could see more volatility
in stocks," he said.
The Walt Disney Co. rose 8.8% for one of the biggest gains in the S&P 500
after the media giant reported a profit for the spring that beat Wall Street's
expectations, even if it was down sharply from a year earlier.
Prudential Financial rose 6.2%, helping to drive the financial sector to one
of the market's bigger gains, after it likewise reported results that weren't
as bad as analysts had forecast.
That's been the trend across much of the market this reporting season.
Stocks have continued to climb even though S&P 500 companies appear to be on
track to report a roughly 34% drop in earnings per share from a year earlier,
according to FactSet. That's in part because investors had prepared for an even
steeper drop.
"The overall theme from earnings has been ?not as bad as we feared,'"
Delwiche said. "Estimates came down, and now everybody's beating that really
low bar. Management is as in the dark as everyone else, in terms of what the
path of this recovery is going to be. Everyone is kind of waiting to see what
happens next in terms of the recovery."
Investors are betting that the plunge in profits will prove to be only
temporary and that earnings will recover as economies reopen and a vaccine for
the new coronavirus hopefully gets developed to help the world get closer to
normal.
Shares of biotech company Novavax jumped 10.4% after it reported data on its
vaccine candidate for COVID-19. Analysts cautioned not to over-interpret the
data but called it encouraging.
A better-than-expected reading on the nation's services sector also added to
the mixed picture on the economy. The services sector includes retail, health
care and transportation, and it makes up the bulk of the U.S. economy. It grew
in July for the second straight month, according to a survey by the Institute
for Supply Management, and accelerated when economists were expecting a slight
slowdown.
Even within that report, though, were seeds of concern. Growth in new orders
helped to drive the reading higher, but employment trends in the report weren't
as encouraging.
Treasury yields rose, reclaiming some of their lost ground from a day before
when they sank to a nearly five-month low. The yield on the 10-year Treasury
climbed to 0.54% from 0.51% late Tuesday.
Yields have remained very low as investors have continued to worry about the
weak economy and as the Federal Reserve has unleashed massive amounts of
stimulus.
Gold rose even further into record territory, continuing its strong climb
since the spring amid nervousness about the economy and super-low interest
rates. Gold for delivery in December, the most actively traded contract, rose
$28.30 to settle at $2,049.30 per ounce.
In Europe, Germany's DAX returned 0.5%, and France's CAC 40 rose 0.9%. The
FTSE 100 in London added 1.1%.
In Asia, Japan's Nikkei 225 slipped 0.3%, but South Korea's Kospi added
1.4%. Hong Kong's Hang Seng rose 0.6%, and stocks in Shanghai inched up 0.2%.
Benchmark U.S. crude rose 49 cents to settle at $42.19 per barrel. Brent
crude, the international standard, added 74 cents to $45.17 a barrel
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