U.S. stocks gained after struggling for direction earlier on Tuesday as concerns about global growth and Covid variants kept investors on edge.
The Dow Jones Industrial Average jumped about 175 points or 0.5% almost halfway through the trading day, after briefly falling more than 100 points earlier in the session. The S&P 500 gained 0.4%, while Nasdaq Composite was higher by 0.1%. The Dow sits about 0.5% from a record.
The 10-year Treasury yield remained well below 1.2% on Tuesday, reflecting some of the concerns about slowing economic growth, after falling back to near 5-month lows on Monday. Oil prices continued to fall, with futures for West Texas Intermediate falling below $70 per barrel.
As yields rebounded from their decline midday back to the unchanged mark, stocks edged higher.
The spread of the delta coronavirus variant continued to cloud the outlook for the economy. The seven-day average of daily coronavirus cases in the U.S. reached 72,790 on Friday, surpassing the peak seen last summer when the nation didn’t have an authorized Covid-19 vaccine, according to data compiled by the Centers for Disease Control and Prevention.
Shares of companies that would be hit hardest by new health restrictions, including airlines and cruise lines, fell on Tuesday morning.
However, on the positive side the U.S. reached the 70% Covid vaccine milestone, according to the CDC.
“The delta variant of the virus is now rapidly spreading in the U.S. and a modest pullback in activity can’t be ruled out,” Solita Marcelli, CIO Americas at UBS, said in a note. “But any potential slowdown should be somewhat muted.”
Traders on the floor of the New York Stock Exchange
A mixed day for tech stocks weighed on the broader indexes, with shares of Amazon and Facebook moving lower. The Dow was boosted by health stocks including Amgen and Johnson & Johnson as investors rotated into more defensive names.
Meanwhile, the second-quarter earnings season continues with Under Armour shares rose nearly 5% after the company beat estimates on the top and bottom lines. However, Clorox’s stock fell 11% after a disappointing report.
Shares of Simon Property jumped 2% after the mall owner said sales bounced back to pre-pandemic levels, up 80% from a year ago. It also reported a relatively high occupancy rate.
Through Friday, 88% of S&P 500 companies had reported a positive earnings surprise for the second quarter, which will mark the highest percentage since FactSet began tracking this metric in 2008.
“Rising earnings are providing valuation support,” Terry Sandven, U.S. Bank Wealth Management chief equity strategist, said in a note. “Rising revenue and earnings, generally restrained inflation, relatively low interest rates, ongoing monetary and fiscal stimulus policies and COVID-19 medical progress support our outlook for rising U.S. equities in 2021’s second half.”
Investors are closely monitoring progress in Washington as lawmakers move toward a bipartisan infrastructure bill that would devote $550 billion to U.S. infrastructure. Senate Majority Leader Chuck Schumer aims to rush the 2,702-page legislation through the chamber before a planned monthlong recess starting Aug. 9.