Stocks are little changed as Covid concerns weigh on reopening trades

Stocks are little changed as Covid concerns weigh on reopening trades

U.S. stocks struggled for direction on Tuesday a day after worries about slowing economic growth kept investors on edge and knocked major indexes lower.

The Dow Jones Industrial Average slipped 60 points, or 0.2%. The flat S&P 500 was flat and Nasdaq Composite rose 0.2%. The Dow and S&P 500 closed about 1% below their record highs on Monday.

The 10-year Treasury yield was stable on Tuesday, easing some of the concerns about slowing economic growth, after falling back to near 5-month lows on Monday. However, oil prices continued to fall, with futures for West Texas Intermediate falling below $70 per barrel.

The spread of the delta coronavirus variant continued to keep investors on edge. 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

Source: NYSE

Tesla rose more than 1% in early trading on Tuesday following a 3% pop on Monday.

Shares of Simon Property jumped 3% 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.

Concern about slowing economic growth triggered a drop in Treasury yields on Monday. The yield on the benchmark 10-year Treasury note fell as much as 8 basis points to 1.15%. Monday’s slide in bond yields followed data showing the U.S. manufacturing sector expanded at a slower pace than a month ago.

A late-day sell-off in economically sensitive stocks like materials and industrials eventually pushed the Dow and the S&P 500 into the red.

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. 

Meanwhile, the second-quarter earnings season continues with Under Armour shares rose after the company beat estimates on the top and bottom lines. However, Clorox’s stock fell 11% after a disappointing report.

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.”

About Author

Related posts