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Dow up 300 points, near all-time highs, as stock investors embrace optimism around COVID treatments, cures

Published: Sept. 2, 2020 at 1:36 p.m. ET

By 

Mark DeCambre,

 

MarketWatch and

 

Joy Wiltermuth

Nasdaq Composite trades above 12,000

U.S. equity benchmark indexes were trading higher Wednesday afternoon, as investors drew hope from progress in the development of tests and vaccines for COVID-19, along with the potential for another fiscal stimulus package in Washington.

Investors also digested a mixed batch of economic reports, including a private-sector jobs reading that came in weaker than expected and well below the nearly 1 million that had been estimated for the month.

How are the benchmarks performing?

The Dow Jones Industrial Average DJIA gained 313 points, or 1.1%, at 28,957, edging nearer to its Feb. 12 closing high of 29,551.42. The S&P 500 index SPX climbed 39 points, or 1.1%, at 3,563, after hitting an intraday record at 3,566.14, while the Nasdaq Composite Index COMP advanced 79 points to reach 12,019, a gain of 0.7%, after setting its own intraday all-time high at 12,050.46.

On Tuesday, the Dow rose 215.61 points to end at 28,645.66, or 0.8% higher, the S&P 500 index  added 26.34 points to close at a record 3,526.65, a gain of 0.8%, after setting an intraday record of 3,528.03; while the Nasdaq Composite Index advanced 165.21 points to a record 11,939.67 finish, a rise of 1.1%, after touching a new intraday all-time high of 11,945.72.

What’s driving the market?

Stock markets were on pace to touch fresh records Wednesday, with a number of possible catalysts boosting the investing mood amid the coronavirus pandemic. Bloomberg reported that U.S. Treasury Secretary Steven Mnuchin again restarted talks with House Speaker Nancy Pelosi, sparking fresh hope of another fiscal stimulus plan to help out-of-work Americans.

On the health front, the leading infectious disease health expert Dr. Anthony Fauci said that a COVID-19 pandemic cure could come sooner than expected if the roster of companies attempting to achieve a vaccine are able to produce outstanding preliminary results.

Speaking to Kaiser Health News, Fauci said the board overseeing vaccine approvals could decided that “the data is so good right now that you can say it’s safe and effective.”

The global tally for confirmed cases of the coronavirus that causes COVID-19 climbed to 25.8 million on Wednesday, according to data aggregated by Johns Hopkins University, while the death toll rose to 857,552

Buying continued in large-capitalization technology stocks and shares tied to pandemic stay-at-home trends, which on Tuesday led the S&P 500 index to record its 21st record close of 2020 and the Nasdaq Composite its 41st.

Stocks advanced despite Automatic Data Processing Inc ADP data showing 428,000 private-sector jobs were created in August, missing expectations for a gain of 900,000 jobs, according to a consensus of estimates surveyed by Econoday.

“It’s a pretty substantial miss, but still much better than what we saw last month,” said Mike Loewengart, managing director investment strategy at E-Trade Financial, via email.

ADP did, however, raise last month’s jobs figure to 212,000 for July from a rise of 167,000, which was then below forecast of 1.9 million jobs.

The economy has recouped fewer than half of the 20 million-plus jobs lost in the early stages of the coronavirus pandemic.

“With a lot riding on employment data, any signs pointing to a positive trajectory could bring our economic recovery closer in line with the markets stellar performance,” the E-Trade strategist said. “And with Washington back in action, hopes for an answer to the labor problem are high. What remains to be seen is how that package will play into employment numbers in the weeks ahead,” he said.

In other news, the Centers for Disease Control and Prevention late Tuesday implemented a temporary eviction moratorium through the end of the year, protecting millions of U.S. renters from losing their homes during the COVID-19 pandemic, the Trump administration announced.

“Certainly, the real estate sector continues to be one that very few investors think will emerge in good shape,” said Cameron Brandt, director of research at EPFR, in an interview with MarketWatch.

Although, Brandt does sees improvements in the cards for a broader base of stocks, beyond the stay-at-home winners and technology giants, as the general population becomes more comfortable with the idea that COVID-19 can be a managed risk.

“People want to get on with their lives,” he said, adding that basic restocking, differed consumption and other factors that go along with reopening “will provide modest surprises to the upside.”

Separately, U.S. factory orders rose 6.4% in July for a third straight increase, reflecting a rebound in manufacturing after the economy reopened. Economists polled by MarketWatch had forecast a 6.2% gain.

Other economic data, will be watched, including the Federal Reserve’s Beige Book, an anecdotal account of business conditions in the central bank’s districts set to be released at 2 p.m. Eastern.

Which stocks are in focus?

• Shares of Macy’s Inc. M were up modestly Wednesday, after the department store chain reported a fiscal second-quarter loss that was much narrower than expected as net sales topped forecasts.
• Vera Bradley Inc. shares VRA soared Wednesday, after the handbag and accessories retailer posted a surprise profit for the second quarter.
• Shares of DraftKings DKNG rallied Wednesday after the company added basketball legend Michael Jordan as an adviser to the company.
• Shares of Peloton Interactive Inc. PTON ran up 8% toward record territory Wednesday, extending the 25.9% rally over the past six sessions, after J.P. Morgan analyst Doug Anmuth boosted his price target to the highest among Wall Street analysts, citing optimism ahead of next week’s earnings report.
• Shares of Jack Daniel’s parent Brown-Forman Corp. BF.B rose Wednesday, after the alcohol brands company reported fiscal first-quarter results that beat expectations, although gross margin contracted as price/mix decreased.
• Shares of ServiceMaster Global Holdings Inc. SERV were up Wednesday, after the termite and pest control company said it’s selling its ServiceMaster Brands franchise business for $1.55 billion to Roark Capital.
• Clothing retailer Guess Inc. shares GES soared Wednesday, after the company blew past estimates for its fiscal second quarter.
• Mobile games platform Skillz Inc. said Wednesday it is going public via a merger with special purpose acquisition corporation Flying Eagle Acquisition Corp. FEAC . The deal has an implied equity valuation of $3.5 billion, or 6.3 times estimated 2022 revenue, the company said in a statement.

How are other assets trading?

The Stoxx Europe 600 SXXP finished 1.7% higher Wednesday, while U.K.’s FTSE 100 benchmark UKX rose 1.4%.

The yield on the 10-year Treasury note TMUBMUSD10Y edged back 3 basis points at 0.64%. Bond prices move inversely to yields.

Gold GCZ20 shed $35.50, or 1.8%, at $1,943.70 an ounce, pulling back from its highest settlement in about two weeks on Tuesday. West Texas Intermediate crude for October delivery CL.1 traded $1.40 lower, or 2.4%, at $41.73 a barrel on the New York Mercantile Exchange.

The ICE U.S. Dollar Index DXY , which tracks the currency versus a basket of six major rivals, rose 0.4% at 92.74 after trading down earlier in the session.

In Asia, China’s CSI 300 000300 closed less than 0.1% higher and Hong Kong’s Hang Seng HSI finished 0.3% lower. Japan’s Nikkei 225 NIK rose 0.5%, while the South Korea’s Kospi 180721 gained 0.6%.