Major U.S. stock indexes were treading water on Monday, apart from a rallying Nasdaq index, as investors watched for progress toward another coronavirus rescue program and braced for the busiest week of earnings season.
What are major benchmarks doing?
The Dow Jones Industrial Average
DJIA,
was down 4 points to 26,476, while the S&P 500
SPX,
was up a single point to 3,217. The tech-heavy Nasdaq Composite
COMP,
led the market’s gains on Monday, trading up 76 points, or 0.7%, to 10,439.
Major benchmarks ended modestly lower Friday, leaving the Dow with a weekly loss of 0.8%, while the S&P 500 declined 0.3% for the week. The Nasdaq lost 1.3% in a week that saw previously highflying tech shares suffer the brunt of selling pressure.
What’s driving the market?
Stocks extended their muddled trading as U.S.-China tensions continued to simmer, with Beijing last week ordering the U.S. to close its consulate in the western Chinese city of Chengdu days after Washington ordered the closure of China’s Houston consulate. A lack of progress toward a second U.S. spending plan and a continued rise in COVID-19 cases were also cited for the soft tone at the end of last week.
After disagreements between themselves and the White House, Senate Republicans were expected Monday to release their proposal, news reports said.
“After a generally down day Friday on Wall Street, markets are somewhat encouraged this morning by news that the Republicans have at least agreed among themselves on a proposal for fixing the ‘fiscal cliff’ that millions of unemployed in the U.S. are about to fall off of when their federal unemployment benefits expire at the end of this week,” said Marshall Gittler, head of investment research at BDSwiss Group, in a note.
However, Republican plans to approach the legislation in a piecemeal approach remain stiffly opposed by Democrats, he noted. The talks come as a provision that provides an additional $600 a week in unemployment benefits to more than 32 million out-of-work Americans expires at the end of the month.
Earnings season continues apace this week, including results from a host of tech heavyweights. Google parent Alphabet Inc.
GOOG,
GOOGL,
Amazon.com
AMZN,
,
Apple Inc.
AAPL,
and Facebook Inc.
FB,
are all due to report within a 24-hour window Wednesday and Thursday.
Chief executives from all four companies will appear in congressional hearings on Wednesday to answer questions around their business practices.
Earnings Watch:Big Tech’s big test arrives in the busiest week of earnings season
Through the end of last week, companies representing 30.5% of the S&P 500’s market value had reported second-quarter results, with earnings beating expectations by 13.7% in aggregate, with 79% of companies beating lowered estimates, said Jonathan Golub, chief U.S. equity strategist at Credit Suisse, in a note.
See:S&P 500 earnings have been as bad as feared, even as the beat rate has improved
Price action, however, has been more muted than normal, he wrote, with companies beating both revenues and earnings outperforming the market by 1.2% versus a historical average of 1.6%. Companies missing on both measures have lagged by just 0.7% versus a historical average of 3.1%.
On the economic front, durable-goods orders for June climbed 7.3%, orders minus transportation rose 3.3%, with core capital-goods orders seeing a similar rise.
The Federal Reserve will conclude its two-day policy meeting on Wednesday. Investors generally don’t expect the central bank to make any major announcements, but look for Chairman Jerome Powell to maintain a dovish tone.
Powell’s remarks might also resonate on Capitol Hill as negotiations toward a rescue package continue, said Bernard Baumohl, chief global economist at the The Economic Outlook Group, in a note.
“If the Fed chairman emphasizes the urgent need for fiscal policy to address the widening economic divide in this country caused by the COVID-driven recession, it will be hard for those on Capitol Hill to ignore it,” he said.
Which companies are in focus?
- Moderna Inc.
MRNA,
shares rose over 8% after it said over the weekend that it had secured another $472 million commitment from the government to develop a COVID-19 vaccine. - Shares of toy-maker Hasbro Inc.
HAS,
were off more than 3% after reporting an adjusted second-quarter profit and revenue that came in below expectations, as the COVID-19 pandemic has led to temporary store closures, product shortages and lower retail inventories. - Albertsons Cos. Inc.
ACI,
stock rose nearly 1% after the grocer reported first-quarter earnings that beat expectations. - Papa John’s International Inc.
PZZA,
said that it will bring on another 10,000 workers due to the COVID-19-related surge in business. - Alphabet Inc.
GOOGL,
said it would extend its work-from-home order for its employees until summer 2021. Previously, the tech company had told employees they could return to the office as early as January.
How are other markets trading?
In Asia, China’s CSI 300 gauge
000300,
rose 0.5%, the Shanghai Composite Index declined gained 0.3%, while Hong Kong’s Hang Seng index
HSI,
shed 0.4%.
In Europe, the Stoxx 600 Europe index
SXXP,
headed 0.3% lower, while the U.K.’s FTSE 100
UKX,
declined 0.2%.
Gold futures
GCQ20,
touched an all-time intraday high and were on pace to extend its record run on Monday, up 1.6%, to $1,927 an ounce on the New York Mercantile Exchange.
September futures for the U.S. crude benchmark
CLU20,
fell 32 cents, or 0.8%, to settle at $40.97 a barrel on the New York Mercantile Exchange.
The 10-year Treasury note yield
TMUBMUSD10Y,
hung around the lowest levels since April 21 at 0.58%. Yields move in the opposite direction of prices.
In currency markets, the dollar fell 0.7% lower against its six major rivals, around its lowest level in two years, as gauged by the ICE U.S. Dollar Index
DXY,
.