Stocks on Track to End Second Quarter Up Sharply
By Anna Isaac
U.S. stock futures drifted down Tuesday as investors gauged the
risks posed by fresh lockdowns to the economic recovery while
rebalancing portfolios on the final day of the second quarter and
locking in gains.
Futures tied to the S&P 500 ticked 0.6% lower. That still
leaves the gauge for U.S. stocks on track to end the quarter having
erased most of its losses from the first three months of the
In Europe, stock markets wobbled between gains and losses,
sending the Stoxx Europe 600 index edging down 0.4%. Equities
across Asia rallied, and most major benchmarks closed for the day
Fresh data pointing to a strengthening recovery in China's
manufacturing sector was clouded by investors trying to determine
whether governments' new restrictions could be enough to prevent
health-care systems from being overwhelmed, while posing less of an
economic cost than prior shutdowns.
"China's economic data was pretty strong, driving up Asian
stocks and offering some comfort to other markets as well," said
Seema Shah, chief strategist, at Principal Global Investors. "But
the resurgence of the virus in the U.S. and new restrictions will
be the main focus for investors."
U.S. stocks are likely to "see a slow consolidation" in coming
weeks, rather than a strong rally or a sharp correction, said Ms.
A gauge of U.S. consumer confidence, measured by the Conference
Board, is likely to offer fresh insights into American households'
willingness to spend money and drive the economic recovery. That
reading is due out at 10 a.m. ET.
"The key data at the moment are anything that offers insight on
consumer confidence," said Ms. Shah. "If people start to see
localized lockdowns and that weighs on confidence, it will weigh on
Cases of new infections alone won't be enough to gauge the
economic impact of the virus going forward, analysts and economists
"Authorities have much more experience now than in March and
April," said Holger Schmieding, chief economist at Berenberg Bank.
"Targeted measures such as closing crowded bars and face masks,
plus a change in behavior, will avoid a New York or Northern
Italy-style overstretch of the health care systems," which is the
key risk facing financial markets, he said.
Earlier this week, authorities in Florida, Texas, California and
Arizona -- the states that have accounted for much of the recent
rise in U.S. cases -- imposed new restrictions and retreated on
reopening plans. In the U.K., the city of Leicester was placed
under severe restrictions Monday after data showed it had elevated
infection levels relative to the rest of the country.
Over in Asia, fresh signs emerged Tuesday that China's economic
recovery is picking up steam with the lifting of the
coronavirus-related lockdowns. Exports and services benefited from
government support policies and the reopening of some overseas
markets, official data showed, though the world's second-largest
economy remains far from a full recovery. An official gauge of
China's factory activity rose to a three-month high in June,
marking four straight months of gains.
The Shanghai Composite Index, which tracks Chinese stocks, rose
0.8%. Elsewhere in Asia, Japan's Nikkei 225 benchmark was among the
biggest gainers, closing up 1.3%.
Federal Reserve Chairman Jerome Powell on Tuesday will tell
Congress the reopening of the U.S. economy -- and the accompanying
upturn in spending and hiring this spring -- has happened sooner
than central bank officials expected. The push to lift restrictions
on commercial activity carries other risks, especially in terms of
keeping the virus in check, he said in testimony prepared to
deliver before lawmakers at 12:30 p.m. ET.
In bond markets, the yield on the 10-year U.S. Treasury note
ticked lower to 0.630%, from 0.636% Monday.
Write to Anna Isaac at email@example.com
(END) Dow Jones Newswires
June 30, 2020 05:30 ET (09:30 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.