Dow up nearly 300 points, but off session highs after Senate passes bill to delist Chinese companies from U.S. exchanges

Oil Extends Rally as US Inventories Fall — Market Talk
May 20, 2020
Fonti TV 5-20-20
May 20, 2020

Dow up nearly 300 points, but off session highs after Senate passes bill to delist Chinese companies from U.S. exchanges

Minutes from the Fed’s April 28-29 meeting will be released at 2 p.m.

U.S. stocks are higher on Wednesday, following upbeat quarterly corporate results from retailers Target and Lowe’s, but off the session’s best levels as a bill to delist Chinese companies on U.S. exchanges cleared the Senate.

An account of the Federal Reserve’s most recent policy meeting, due for release later Wednesday, may also draw investor attention.

How are benchmarks performing?

The Dow Jones Industrial Average DJIA, +1.34% advanced 294 points, or 1.2%, to 24,501. The S&P 500 SPX, +1.59% climbed 42 points, or 1.4%, to 2,965. The Nasdaq Composite COMP, +1.92% rose 157 points, or 1.7%, to 9,343.

On Tuesday, the Dow fell 390.51 points, or 1.6%, to end at 24,206.86, near a session low, while the S&P 500 index shed 30.97 points, or 1.1%, to finish at 2,922.94. The Nasdaq Composite Index  declined 49.72 points, or 0.5%, to close at 9,185.10.

The Nasdaq is only a few percentage points away from its all-time record high, supported by recent strength in technology and internet stocks during the coronavirus pandemic.

What’s driving the market?

U.S. stocks are higher on Wednesday, following upbeat quarterly corporate results from retailers Target and Lowe’s, but off the session’s best levels after a bill to delist Chinese companies on U.S. exchanges cleared the Senate.

The Senate approved the Holding Foreign Companies Accountable Act without objection on Wednesday, which seeks to force Chinese companies to adhere to U.S. securities law, ultimately by barring many from listing shares on U.S. exchanges, or otherwise raising money from American investors.

The bill still would need to pass the Democratic-controlled House of Representatives before reaching the president’s desk to be signed into law.

The bill’s advancement follows the latest batch of quarterly results from retailers, which underscored some resilience among the sector’s biggest companies during the coronavirus pandemic, including the willingness of consumers to spend despite the crisis.

Lowe’s CosLOW, -0.33% reported sales and profit significantly above expectations, while Target CorpTGT, -2.70% beat estimates on revenue and sales growth, with digital sales soaring 141%.

Get Our Free “Need to Know” Newsletter

That helped to drive buying appetite on Wednesday, in a marketplace that has been vulnerable to pullbacks after the main benchmarks managed to retrace much of the losses suffered in March over the past few weeks.

“There are still consumers with jobs that still feel secure,” said Quincy Krosby, chief market strategist at Prudential Financial, in an interview.

She pointed to new mortgage applications that rose 6% last week, according to data from the Mortgage Bankers Association. “You don’t start the mortgage application process unless you feel financially secure,” said Krosby.

On Tuesday, the fragility of the recent gains for major stock indexes was on full display as a lackluster session turned into a nearly 400-point downturn for the Dow, following a report from Stat News that offered a more sober view of phase-one results from Moderna Inc.’s MRNA, +1.08% coronavirus vaccine candidate.

“You have an undecided market,” Peter Cardillo, chief market economist at Spartan Capital Securities, told MarketWatch. “One day it’s risk on, the next it isn’t. But the market certainly doesn’t want to fall apart, and it doesn’t want to explode on the upside either.”

Hope for a remedy for the coronavirus has been viewed as one of the key elements necessary for the economy to recover from business shutdowns imposed combat the pandemic.

Investors, meanwhile, appear to be focusing on the positives and directing their attention to wider reopening plans that are taking place throughout the U.S. Many states are lifting restrictions on business and personal activity ahead of the Memorial Day holiday next Monday.

SeeU.S. states reopen after coronavirus lockdowns

Still, investors may have to contend with a long, uneven road toward recovery from prospective recession.

The Congressional Budget Office said it is projecting GDP to fall 38% in the second quarter, a forecast roughly in line with Wall Street economists, and for the federal budget deficit to hit $2.1 trillion in the fiscal 2020 ending on September 30.

Although a number of Fed officials have already spoken, including Powell, investors might look to parse minutes from the policy-setting Federal Open Market Committee’s April 28-29 meeting due at 2 p.m. Eastern for further insights on the central bank’s outlook.

“The market wants to pay attention to how the Fed sees its next move in monetary policy,” said Krosby.

Which stocks are in focus?

  • Tesla Inc. TSLA, +1.00% shares were up 0.7% Wednesday as the electric-vehicle maker said it will raise the price of the “full self-driving” option on its electric vehicles worldwide by $1,000 starting July 1, the company said.
  • Luckin Coffee Inc. LK, -35.08% is scheduled to resume trading Wednesday, Nasdaq IncNDAQ, +2.13% said late Tuesday. Nasdaq halted trading of the company’s stock April 7. Luckin Coffee received a delisting notice from the exchange platform May 15 because of “public interest concerns” related to “fabricated” transactions disclosed by the company in its annual report. Its shares tumbled 40%.
  • Johnson & Johnson IncJNJ, -0.36% said late Tuesday it will stop selling talc-based baby powder in North America following a flurry of lawsuits alleging the product causes cancer. Shares edged down 0.4%.
  • Shares of Lowe’sslipped 0.8% Wednesday, even after the home improvement retailer reported fiscal first-quarter profit and sales rose well above expectations, and said the sales momentum has continued into May.
  • Targetbeat first-quarter earnings and revenue expectations with help from its digital sales capabilities as e-commerce grew by 141% during the period.
  • L Brands IncLB, -3.67% Take-Two Interactive Software Inc. TTWO, +4.09% and Expedia Group Inc. EXPE, +2.59% slated to report after the end of Wednesday’s regular session.
  • Clorox Co. CLX, +1.18% said its board has approved a 5% increase in its quarterly dividend to $1.11 a share from $1.06.
  • Shares of McKesson CorpMCK, +2.86% rose Wednesday, after the retail pharmacy and health care services company reported fiscal fourth-quarter earnings that beat expectations, but provided a downbeat earnings outlook citing “anticipated headwinds” as a result of the COVID-19 pandemic.
  • Shares of Inovio INO, +9.54% gained 9.8% on Wednesday after the company said its COVID-19 vaccine candidate demonstrated neutralizing antibodies in animals.
  • Shares of Aurora Cannabis IncACB, -12.35% fell as investors have parsed its negative Ebitda and focused on better-than-expected revenue, wrote analysts Rahul Sarugaser and Michael Freeman.
  • Shares of Royal Caribbean Cruises LtdRCL, -2.44% fell Wednesday, even after the cruise operator swung to a first-quarter loss that was wider than expected as the COVID-19 pandemic led to cruise suspensions, but said 2021 bookings remained within historical ranges.

How are other markets trading?

U.S. government bond yields were slightly lower, with the 10-year Treasury note TMUBMUSD10Y, 0.685% off 1 basis point at 0.69% on Wednesday. Bond prices move inversely to yields.

The U.S. dollar weakened against a basket of its major rivals, with the ICE U.S. dollar index DXY, -0.23% trading down 0.2%.

In precious metals, gold futures for June delivery GCM20, +0.38% rose $3.10, or 0.3%, at $1,751.70 an ounce. Crude prices for July delivery US:CLM20 CL.1, +3.37% added $1.02 cents, or 3.2%, to trade at $32.98 a barrel.

In global equities, the Stoxx Europe 600 index SXXP, +0.98% gained 1%, while the FTSE 100 UKX, +1.08% rose 1.1%.

In Asia trade, Japan’s Nikkei NIK, +0.79% rose 0.8%, Hong Kong’s Hang Seng HSI, +0.04% advanced less than 0.1%, the Shanghai Composite Index SHCOMP, -0.51% closed down 0.5%, as did the CSI 300 Index 000300, -0.53%.

Mark DeCambre contributed reporting