A stock rally lost steam Monday afternoon, with the S&P 500 and Nasdaq turning negative and the Dow wiping out much of its earlier gains. The 30-stock index had been up as much as 2.2%, or 564 points, earlier in the day.
Stocks had risen earlier after Pfizer (PFE) and BioNTech SE (BNTX) announced they had received “fast track” designation from the US Food and Drug Administration for the development of two of their vaccine candidates against Covid-19, stoking hopes of near-term inoculation amid the pandemic. The S&P 500 briefly turned positive for the year to date.
Some business re-closures spooked investors as the session rolled on, however. California Governor Gavin Newsom on Monday ordered that all counties across the state re-close indoor operations for businesses including restaurants, bars, movie theaters and museums. And earlier, the state’s two largest public school districts announced all instruction would be remote-only in the fall.
Over the weekend, some states again reported surging numbers of new coronavirus cases, as parts of the country struggled to keep new infections at bay. New cases in Florida rose by more than 12,000 as of Monday, a day after the state reported a record 15,300 new Covid-19 cases as of Sunday, the highest one-day total for any US state so far during the pandemic.
Despite the ongoing surge in the state, Disney’s (DIS) Walt Disney World Resort began reopening in Florida on Saturday to join competitors including Comcast’s (CMCSA) Universal Studios and SeaWorld Entertainment in opening their park gates to customers in the state. However, Disney said Monday that it would re-close Hong Kong Disneyland starting Wednesday, as new cases in Hong Kong rose by 41 on Monday for a record one-day gain in the region.
Elsewhere, new cases in Arizona rose by the smallest amount in two weeks, with new infections at 1,357 as of Monday’s count.
“The economic implications of the second wave are pretty clear, qualitatively at least. The third quarter recovery will be slower than we previous expected, but we're hoping that some of the deferred spending will be pushed into the fourth quarter rather than abandoned altogether,” Ian Shepherdson, chief economist for Pantheon Macroeconomics, wrote in a note.
“Markets are caught in the middle. We have argued for months that a full recovery depends on three pillars, namely, sustained progress against the virus, the continuance of super-accommodative Fed policy, and consistent support from fiscal policy,” he added. “Clearly, the first pillar has crumbled, and the third is now in limbo, with the Senate in recess until July 20. The Fed can't do everything, so we're not surprised that the S&P 500 has been range-bound since late May.”
As for other potential market catalysts, second-quarter earnings season kicks off this week with a packed docket of big bank earnings, along with other early reporters including Netflix (NFLX), UnitedHealth Group (UNH) and Delta Airlines (DAL). Financials, which have lagged for the year to date, outperformed on Friday heading into earnings season, with the KBW Bank Index (KBW) rising by the most in five weeks at the end of last week.
Market participants have so far set a low bar for second-quarter earnings results across sectors, with the coronavirus pandemic and measures taken to contain it at their most widespread in the April through June period this year. The estimated earnings decline for the S&P 500 is 43.8% for the second quarter, according to data from FactSet as of early July. Such a result would represent the largest year-over-year decline in earnings since the fourth quarter of 2008, and a steep downward revision from the estimate as of March 31, which had been for a decline of 13.6%.
4:02 p.m. ET: S&P 500 erases earlier gains to close lower after briefly turning positive for the year
Here were the main moves in markets as of 4:02 p.m. ET:
S&P 500 (^GSPC): -29.75 (-0.93%) to 3,155.29
Dow (^DJI): +10.77 (+0.04%) to 26,086.07
Nasdaq (^IXIC): -226.60 (-2.13%) to 10,390.84
Crude (CL=F): -$0.92 (-2.27%) to $39.63 a barrel
Gold (GC=F): +$2.50 (+0.14%) to $1,804.40 per ounce
10-year Treasury (^TNX): +0.7 bps to yield 0.6400%
2:35 p.m. ET: Tesla rally loses some steam in afternoon trading, after surging 16% earlier in the day
Shares of Tesla (TSLA) hugged the flat line with about 90 minutes left of the session Monday, after surging 16% to a record high of $1,794.99 earlier in the day.
On Monday, long-time Tesla bear Craig Irwin of Roth Capital Partners upgraded shares of Tesla to Neutral from Sell, and raised his price target to $750 from $350. He cited Tesla’s potential move into the Indian market – which could see a growth trajectory on par with that of China – as well as a forthcoming Tesla mini-car electric vehicle, as factors contributing to the more upbeat call.
Tesla is slated to report fiscal second quarter earnings results on July 22. Many analysts believe Tesla will report a profit, after having handily topped second-quarter delivery expectations despite the pandemic.
1:59 p.m. ET: Stocks add to gains, Dow rises 500+ points
Here were the main moves in markets, as of 1:59 p.m. ET:
S&P 500 (^GSPC): +44.05 points (+1.38%) to 3,229.09
Dow (^DJI): +534.41 points (+2.05%) to 26,609.71
Nasdaq (^IXIC): +129.04 points (+1.21%) to 10,745.53
Crude (CL=F): +$0.01 (+0.02%) to $40.56 a barrel
Gold (GC=F): +$10.70 (+0.59%) to $1,812.60 per ounce
10-year Treasury (^TNX): +1.2 bps to yield 0.645%
11:17 a.m. ET: Disney announces it will re-close Hong Kong Disneyland following virus resurgence in city
Disney announced Monday plans to close Hong Kong Disneyland yet again as the city grapples with another rise in coronavirus cases.
The temporary re-closure will take effect Wednesday, and is being carried out in line with preventative measures across Hong Kong, per requirements by the government and health authorities. Hong Kong Disneyland Resort Hotels will still remain open, albeit with adjusted levels of service.
10:45 a.m. ET: ‘The epicenter of Covid-19 remains in the Americas,’ says WHO
The World Health Organization’s Director-General Tedros Adhanom Ghebreyesus said during a press briefing Monday that the Americas comprise the global epicenter of the coronavirus pandemic, with the US and Brazil accounting for half of the 230,000 new infections reported worldwide as of yesterday.
"The epicenter of Covid-19 remains in the Americas where more than 50% of the world’s cases have been recorded,” he said. “But we know from the first two situations that it is never too late to bring the virus under control, even if there’s been explosive transmission.”
"There will be no return to the old ‘normal’ for the foreseeable future,” he added. “But there is a roadmap to a situation where we can control the disease and get on with our lives.”
9:31 a.m. ET: Stocks open higher
Here were the main moves in markets, as of 9:31 a.m. ET:
S&P 500 (^GSPC): +26.76 points (+0.84%) to 3,211.8
Dow (^DJI): +249.99 points (+0.96%) to 26,325.29
Nasdaq (^IXIC): +115.28 points (+1.1%) to 10,731.46
Crude (CL=F): -$0.32 (-0.79%) to $40.23 a barrel
Gold (GC=F): +$15.20 (+0.84%) to $1,817.10 per ounce
10-year Treasury (^TNX): +2.5 bps to yield 0.658%
9:11 a.m. ET: PepsiCo shares rise after consumer pantry loading drives Q2 earnings beat
Food and beverage giant PepsiCo (PEP) reported fiscal second-quarter results that topped consensus estimates, driven by a jump in sales at the company’s North American food and snacking businesses.
Core earnings per share of $1.32 per share was better than the $1.25 expected, and net revenue of $15.95 billion also topped estimates for $15.39 billion. Organic sales PepsiCo’s Quaker Foods North America unit surged 23% over last year, or more than three times greater than expected, and Frito-Lay North America also outperformed. However, PepsiCo’s North American beverage unit – its largest by sales – saw organic revenue drop 7% during the quarter.
“Our snacks and food business has performed very well, while our beverage business was challenged but continued to improve its competitive positioning,” PepsiCo CEO Ramon Laguarta said in prepared remarks of 2Q results. We expect our snacks and foods businesses to remain resilient, albeit with some moderation in growth, while our beverages business should deliver better performance during the second half of this year.”
7:26 a.m. ET Monday: Futures extend gains after vaccine hopes rise further
Here were the main moves in markets, as of 7:27 a.m. ET:
S&P 500 futures (ES=F): 3,201.75, up 23.25 points or 0.73%
Dow futures (YM=F): 26,191.00, up 214 points, or 0.82%
Nasdaq futures (NQ=F): 10,931.25, up 94 points, or 0.87%
Crude (CL=F): -$0.76 (-1.87%) to $39.72 a barrel
Gold (GC=F): +$12.90 (+0.72%) to $1,814.80 per ounce
10-year Treasury (^TNX): +1.3 bps to yield 0.646%
6:02 p.m. ET Sunday: Stock futures add to Friday’s gains
Here were the main moves at the start of the overnight session for U.S. equity futures, as of 6:02 p.m. ET:
S&P 500 futures (ES=F): 3,189.75, up 11.25 points or 0.35%
Dow futures (YM=F): 26,081.00, up 104 points, or 0.4%
Nasdaq futures (NQ=F): 10,857.25, up 20 points, or 0.18%