By Caitlin Ostroff and Dawn Lim
U.S. stocks rose Tuesday as investors held out cautious hope for
progress in Washington over an aid package to support an economy
roiled by a pandemic.
Investors are monitoring negotiations among Democratic leaders
and White House officials on a new round of stimulus. The two sides
remain at odds over whether to cut a $600-a-week federal jobless
supplement or provide aid to financially strapped states and
localities. Washington has been under pressure to iron out a deal
since jobless supplements for millions of Americans expired.
The Dow Jones Industrial Average rose 164.07 points, or 0.62%,
to 26828.47. The S&P 500 ticked up 11.9 points, or 0.36%, to
3306.51. The technology-heavy Nasdaq Composite edged up 38.368
points, or 0.35%, to 10941.17.
"There's a bit of a pause if you will, as investors are waiting
for confirmation on what the shape of the stimulus will be," said
Lori Heinel, State Street Global Advisors's deputy global chief
investment officer. "Clearly the market is looking for another
sugar rush."
Many investors are parsing through the toll of Covid-19, which
left millions unemployed and battered profits for swaths of the
economy. In recent weeks, gold has been one of the largest
beneficiaries of a pause in other markets.
Front-month gold futures for August delivery gained $35.20 per
troy ounce, or 1.79% to $2001.20 Tuesday on the Comex division of
the New York Mercantile Exchange, marking a new record high.
Richard Bernstein, chief investment officer of Richard Bernstein
Advisors, said that gold's march is one indication that investors
are uncertain about whether stimulus measures by Federal Reserve
and U.S. government will translate to a broader recovery.
"The market does view it as a good cushion," he said, "But it's
very uncertain over how it works it way into the economy."
Investors face a host of unknowns, including whether a recent
decline in new cases will hold up, and how aggressively states will
be able to stem the spread of the virus.
"One day's data doesn't mean anything, but I'm looking at
whether that's the beginning of a trend," said Fahad Kamal, chief
market strategist at Société Générale's private banking and wealth
management division Kleinwort Hambros.
Although the pandemic has crimped profits for many businesses,
more than three-quarters of S&P 500 companies have reported
earnings, with the majority beating analyst expectations, according
to UBS. This has led estimates for the third quarter to rise by
2.5% since the end of June.
Robust earnings from tech companies have lifted U.S. stock
markets higher in recent weeks. The advances by big tech stocks is
acknowledgment by investors that certain companies have become
major beneficiaries as people rely more on software, cloud
computing and social media to stay connected and to work from home.
In a sign of tech's rise, the industry made up at least 50% of the
Nasdaq Composite for the first time since April 2012, according to
Factset data as of Monday's close.
But the tech-heavy index showed only soft gains Tuesday, and
lagged the Russell 2000 Index's 0.69% rise. This suggested that
investors have questions about whether some tech names could be
overpriced.
Facebook Inc. fell $2.13, or 0.85%, to $249.83. Alphabet Inc.
declined $9.46, or 0.64%, to $1473.30. Microsoft was down $3.25, or
1.5%, to $213.29 amid uncertainty over whether it will be able to
close a deal for U.S. operations of the hit video-sharing app
TikTok. The deal would bring a Chinese technology crown jewel under
U.S. ownership, but faces significant scrutiny in Washington.
Gaming companies got a boost. Shares in Take-Two Interactive
Software Inc., the company behind Grand Theft Auto and other gaming
franchises, rose $9.84, or 5.87%, to $177.52 after it raised
financial projections for the year on higher demand for videogames
during the pandemic. Activision Blizzard rose $1.66, or 1.96% to
$86.45.
After the closing bell, Walt Disney Co. reported a quarterly
loss of nearly $5 billion Tuesday due to a pandemic that has all
but paralyzed its theme parks, live productions and cruise
line.
Bond yields ticked lower. The yield on the 10-year Treasury
declined to 0.514% Tuesday, from 0.562% Monday. Today's yield marks
the second lowest this year for 10-year Treasurys.
"There's more truth in the bond market, and if you look at the
yields they're still at record lows. There's still a very palpable
sense of fear among investors that there could be tail risks that
materialize," Mr. Kamal said.
In the Asia-Pacific region, Hong Kong's Hang Seng climbed 2%,
leading gains in the region. Japan's Nikkei 225 gained 1.7%.
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com and Dawn Lim
at dawn.lim@wsj.com
(END) Dow Jones Newswires
August 04, 2020 17:00 ET (21:00 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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