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Stocks Rebound on Economic Data Amid Virus Angst: Markets Wrap

Stocks Rebound on Economic Data Amid Virus Angst: Markets Wrap

(Bloomberg) — U.S. stocks rose after better-than-estimated economic data offset concern over an increase coranavirus cases. The dollar rose and Treasuries were little changed.

The S&P 500 erased losses after data showed U.S. pending home sales posted a record gain, exceeding all forecasts. A surge in Boeing Co. lifted the Dow Jones Industrial Average after U.S. aviation regulators approved a critical set of test flights on the 737 Max. The tech-heavy Nasdaq underperformed as Facebook Inc. tumbled after more businesses, including Starbucks Corp. and Diageo Plc, joined the growing number of brands planning to halt spending on social media.

Read: Fear of 20% Rout Grows as Bears Refuse to Give In: Taking Stock

The unexpected improvement in economic data partly resulted from some states beging to reopen from coronavirus lockdowns. With cases increasing in states including Texas, California and Florida, some locations are putting a pause on lockdowns. Markets continued to be whipsawed as the World Health Organization reported the most infections for a single day — with global deaths surpassing 500,000 and confirmed cases exceeding 10 million.

“The headline noise around Covid-19 will increase throughout the week, but remember the key is the economy,” wrote Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter. “If states are targeted on restrictions, then the increase in Covid cases will likely not cause a material market decline from current level, especially in the context of ongoing stimulus.”

U.S. companies are providing reason for hope that an earnings recession may be less severe than analysts expect. The signal comes from a profit-outlook index, compiled by Bloomberg and based on corporate revisions to forecasts.

For almost all of June, the index’s 20-day moving average has exceeded 50, showing more companies raised projections than lowered them. The average peaked June 17 at 63.4, the highest reading in the index’s 20-year history. Analysts estimate that second-quarter earnings for the S&P 500 will plunge 44% after a first-quarter decline of 18%.

Here are some key events coming up:

Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin testify before the House Financial Services Committee on Tuesday.The monthly U.S. jobs report will be released on Thursday.

These are some of the main moves in markets:

Stocks

The S&P 500 rose 0.8% as of 10:26 a.m. New York time.The Dow Jones Industrial Average rose 1.5%.The Nasdaq Composite Index increased 0.4%.The Stoxx Europe 600 Index gained 0.6%.The MSCI Asia Pacific Index declined 1.5%.

Currencies

The Bloomberg Dollar Spot Index increased 0.2%.The euro gained 0.2% to $1.1243.The Japanese yen depreciated 0.5% to 107.76 per dollar.

Bonds

The yield on 10-year Treasuries dipped less than one basis point to 0.64%.Germany’s 10-year yield rose one basis point to -0.47%.Britain’s 10-year yield declined one basis point to 0.166%.

Commodities

The Bloomberg Commodity Index climbed 1.2%.West Texas Intermediate crude rose 1.4% to $39.01 a barrel.Gold increased 0.2% to $1,783.50 an ounce.

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