Before The Bell
The stock market, which completed a record-breaking second quarter early last week, then rounded out the rest of the holiday-shortened four-day span to the upside, as well. Stocks then began the first full week of the third quarter on Monday with additional gains. Buoyed by further strength in the technology names, the Dow Jones Industrial Average pressed ahead by well over 400 points to start the week. However, after some reversals overnight yesterday in the futures markets, the Dow and the S&P 500 began the latest session to the downside.
However, that sojourn into negative territory did not last long, and after the first 90 minutes or so, only the blue chips were still lower, as the S&P 500 and especially the tech-laden NASDAQ were back in the green. The NASDAQ would do very well again, climbing by better than 80 points at the morning peak. But those gains would wilt for a time around the lunch hour, with that composite nearly giving back all of its gains in a modest bout of profit taking around 1:00 PM (EDT). Leading the way on the upside again were the shares of Tesla (TSLA).
Hurting stocks yesterday were fresh concerns about COVID-19. The early down move on our shores, meantime, followed global stocks lower on coronavirus fears, as the European Commission warned that a recession could be deeper than initially expected. At home, COVID-19 cases are surging in many states including Florida, Arizona, Texas, and Georgia. Not surprisingly, cruise line issues and those of some airlines, such as United Airlines Holdings (UAL), faltered yesterday on those disease concerns.
Then, as the first part of the afternoon moved along and in the absence of new economic data, following the rapid-fire release of metrics on manufacturing activity, the trade gap, employment, and the nonmanufacturing sector last week and on Monday, the market continued to head lower. In all, the Dow was off by close to 200 points, while the NASDAQ was still in the green by some 20 points. But that modest retreat would deepen as we moved still further into the afternoon, especially as we entered the homestretch of the session.
In fact, as we moved through the final hour, the Dow would drift still lower, albeit in orderly fashion, with the day ending at session lows. All told, the Dow would give back almost as many points yesterday (397) as it had gained on Monday (439). The S&P 500 Index also would fall back, losing 34 points, while the NASDAQ, up for most of the session, would conclude with a 90-point deficit. It would seem for one day at least that worries on the COVID-19 front would outdo optimism on the economy and its recent comeback.
Looking out to a new day now and following a weaker session and some early buying in after hours last night, the equity futures seem poised to begin the middle session of the week in uncertain fashion.
– Harvey S. Katz, CFA
At the time of this article's writing, the author did not have positions in any of the stocks mentioned.
