Wall Street ends choppy session higher on mixed earnings, U.S. stimulus debate
July 23, 2020
Stock market: Wall Street welcomes a decision by Washington
July 23, 2020Dow component Intel’s earnings are on deck; Tesla notches fourth straight profit and paves way for S&P 500 inclusion
U.S. stock-index futures rose modestly early Thursday as Senate Republicans and the White House announced progress toward providing additional funds to help businesses and individuals stricken by the COVID-19 pandemic, though the $1 trillion aid proposal must now be negotiated with Democrats and key issues remain unresolved even with the GOP.
Investors were also upbeat on earnings from the likes of Tesla, with quarterly results from a trio of Dow components on deck Thursday, amid an important update on the pace of the weekly job losses in the country.
How are benchmarks performing?
Futures for the Dow Jones Industrial Average YM00, 0.27% YMU20, 0.27% rose 104 points, or 0.4%, at 26,988; those for the S&P 500 index ES00, 0.25% ESU20, 0.25% were trading 11.40 points higher at 3,276.75, a gain of 0.3%; while Nasdaq-100 futures NQ00, 0.62% NQU20, 0.62% were 91.25 points, or 0.8%, higher at 10,895.50
On Wednesday, the Dow DJIA, +0.61% jumped 165.44 points, or 0.6%, to end at 27,005.84, its highest close since June 9, according to Dow Jones Market Data. The S&P 500 SPX, +0.57% gained 18.72 points, or 0.6%, to close at 3,276.02. The Nasdaq Composite Index COMP, +0.24% added 25.76 points, or 0.2%, finishing at 10,706.13.
What’s driving the market?
Wall Street looked set to open with modest gains on Thursday, on the back of a number of narratives that could embolden bullish investors to take on more risk.
Senate Republicans and the White House struck an agreement on a $1 trillion coronavirus relief package, as a $600 weekly supplement to unemployment benefits is set to expire at the end of this month. The proposal sets the stage for further talks between the Senate Republicans and Democrats, who have coalesced around a $3.5 trillion bill that was passed in the House in May.
Meanwhile, investors await a release of weekly employment-benefit claims from the Labor Department, with 1.31 million workers expected to have filed first-time claims for state unemployment benefits during the week ended July 18, according to estimates from Econoday.
Last week, the figure showed that 1.30 million Americans submitted claims for joblessness insurance. The report is due out at 8:30 a.m. Eastern Time and has become one of the key measures of the state of the COVID-19 pandemic that has been resurgent in many states recently, forcing the reimposition of restrictions to curtail the spread of the deadly illness.
Market participants are parsing a barrage of earnings, include a trio of components from the Dow, including Intel ,Travelers Cos., and Dow Inc.
Those reports come after electric-vehicle maker Tesla produced upbeat results, which featured its fourth consecutive profit thanks to more than $400 million in electric-vehicle tax credits, paving the way for the popular company to join the S&P 500.
Thus far, investors have shrugged off escalating tensions between the U.S. and China, with Beijing vowing to close the U.S. consulate in the southwestern city of Chengdu, according to the South China Morning Post. The move comes after the U.S. ordered the closure of a Chinese consulate in Houston, citing fraud and espionage, highlighting rising tensions between the global superpowers.
On the coronavirus front, there are more than 15.25 million confirmed cases of COVID-19 worldwide and about 624,000 people have died, data aggregated by Johns Hopkins University show.
Brazil is second to the U.S. with 2.22 million cases and nearly 82,000 deaths, behind the U.S. which has 3.9 million cases and 143,000 deaths. Meanwhile, Japan on Wednesday reported a record of 795 new daily coronavirus infections, exceeding the previous single-day high set in April.
“In summary; while equities continue to ignore serious setbacks for the economy such as the feud between China and the U.S. and rising new coronavirus case count, the earnings and a breakthrough on new stimulus are leading the bull charge higher,” wrote Peter Cardillo, chief market economist at Spartan Capital Securities in a daily note.
Looking ahead a report on leading economic indicators is expected at 10 a.m.
Which stocks are in focus?
- Shares of Southwest Airlines Co. LUV, -0.95% rose in premarket trading Thursday, after the air carrier swung to a large loss that was narrower than expected, as the drop in passengers demand wasn’t as bad as feared.
- Hershey Co. HSY, +0.83% said Thursday it had net income of $268.9 million, or $1.29 a share, in the second quarter, down from $313.3 million, or $1.48 a share, in the year-earlier period.
- Shares of Dow Inc. DOW, +3.02% rose in premarket trading Thursday, after the materials science company swung to a slightly wider-than-expected loss but reported revenue that fell less than expected.
- Shares of Quest Diagnostics Inc. DGX, +0.89% slipped in premarket trading Thursday, although the provider diagnostic tests for the health care industry reported a second-quarter profit that fell a lot less than expected, as the rapid expansion of COVID-19 testing helped revenue beat forecasts, but provided an in-line outlook.
- Shares of Travelers Companies Inc. TRV, +1.51% rose in premarket trading Thursday, after the insurer swung to a wider-than-expected second-quarter loss but net written premiums topped forecasts.
- American Airlines Group Inc. AAL, -0.95% posted a big loss for the second quarter, as travel was decimated by the coronavirus pandemic.
