Stocks erased earlier losses and rose Monday, after the Federal Reserve said it would begin purchasing individual corporate bonds as part of its emergency lending program to inject liquidity into the virus-stricken economy.
Earlier in the session, the Dow was off as many as 762 points, or 3%, as investor jitters over rising coronavirus cases in key parts of the country stirred up an extension of last week’s pullback in equities.
Last week, stocks posted their first weekly loss in a month, with a steep selloff on Thursday comprising much of the weekly decline. The plunge, which came on the heels of a more than 40% run-up in the S&P 500 since March, came after new data showed rising coronavirus case and hospitalization counts in states that were among the first to reopen businesses, and after the Federal Reserve last week delivered a grim forecast for near-term economic activity.
Market participants continued to eye coronavirus cases across the country for signs of resurgences. New cases in the densely populated state of Florida grew faster than the past week’s average as of Sunday’s tally, according to Bloomberg data, and Washington State Department of Health issued a report warning of statewide increases in the virus.
In New York, the daily coronavirus death toll came in at 23 as of Sunday, or the lowest since the pandemic began and well below the near 800 per day at the outbreak’s peak in early April. Governor Andrew Cuomo, however, flagged that more than 25,000 complaints had been filed over violations of social distancing standards, and Cuomo warned he would tighten restrictions if businesses and individuals did not comply with the phased reopening process.
Still, some analysts maintained that geographies that have been slower to reopen including the Northeast, were less at risk of a renewed flare-up in cases, given their more protracted original lockdowns.
“We are not worried that the renewed lockdowns we expect in parts of Arizona, Texas, the Carolinas, Arkansas, and perhaps others, will be required elsewhere,” Ian Shepherdson, chief economist for Pantheon Macroeconomics, said in a note. “Far more people have been sick in the densely populated Northeast and Midwest than in most of the South, and lockdowns in major cities have been very long and painful.”
“Accordingly, we’re expecting people in the Northeast and Midwest to be much more cautious about maintaining social distancing, and to be more willing to wear masks in stores, on public transportation and at leisure facilities,” he added.
Meanwhile, White House economic director Larry Kudlow during CNN’s “State of the Union” on Sunday downplayed economic concerns posed by potential new waves of the coronavirus, saying, “There’s a very good chance you are going to get the V-shaped recovery,” and asserting growth would pick back up in the second half of the year. The remarks contrasted with some of the more cautionary outlooks from officials including Federal Reserve Chair Jerome Powell, who last week underscored the ongoing uncertainty created by the pandemic.
Kudlow also said the current $600-per-week unemployment payment paid out to some Americans who had lost their jobs during the pandemic as part of Washington’s sweeping coronavirus relief plan would end on schedule at the end of July, calling the program “a disincentive” for people to return to work.
Later this week, market participants are poised to receive new economic data on the retail trade and manufacturing sectors, which many economists believe will affirm an at least slight pick-up in activity from the doldrums of April.
4:05 p.m. ET: Stocks end a whipsaw session higher after Fed announcement
Here were the main moves in markets as of 4:05 p.m. ET:
S&P 500 (^GSPC): +25.28 (+0.83%) to 3,066.59
Dow (^DJI): +157.62 (+0.62%) to 25,763.16
Nasdaq (^IXIC): +137.21 (+1.43%) to 9,726.02
Crude (CL=F): +$0.77 (+2.12%) to $37.03 a barrel
Gold (GC=F): -$6.20 (-0.36%) to $1,731.10 per ounce
10-year Treasury (^TNX): +0.3 bps to yield 0.7020%
2:15 p.m. ET: Stocks jump after Fed said it will buy individual corporate bonds
Stocks rose and the Dow added more than 200 points, after the Federal Reserve said it will purchase individual corporate bonds that meet their criteria under the central bank’s Secondary Market Corporate Credit Facility. Previously, the Fed had been purchasing just exchange-traded funds under this facility.
The new program will include an index “made up of all the bonds in the secondary market that have been issued by U.S. companies that satisfy the facility's minimum rating, maximum maturity, and other criteria. This indexing approach will complement the facility's current purchases of exchange-traded funds,” the Fed said in a statement.
The central bank will be purchasing bonds will higher credit ratings and up to a five year maturity.
1:16 p.m. ET: Stocks turn positive, erasing earlier losses
Here were the main moves in markets, as of 1:16 p.m. ET:
S&P 500 (^GSPC): +6.57 points (+0.22%) to 3,047.88
Dow (^DJI): +1.48 points (+0.01%) to 25,607.02
Nasdaq (^IXIC): +75.44 points (+0.79%) to 9,664.73
Crude (CL=F): +$0.45 (+1.24%) to $36.71 a barrel
Gold (GC=F): -$9.10 (-0.52%) to $1,728.20 per ounce
10-year Treasury (^TNX): unchanged to yield 0.669%
9:51 a.m. ET: People ‘really want to get out of the house’ – and that’s good for the economic recovery, strategist says
John Stoltzfus, chief investment strategist for Oppenheimer Asset Management, said in a note Monday that individuals’ eagerness to return to some semblance of normalcy will help carry the economic recovery, so long as new flare-ups in the virus do not stunt reopenings.
“One very positive thing that appears evident from our observations of the stateside reopening as well as other restarts around the globe is that most folks really want to get out of the house, back to school, back to work, back to play and to all the many facets of normal everyday life,” Stoltzfus said. “That desire is good for the individual, society and the economy. It’s how the process of the reopening is executed that will make the difference between success and failure.”
In the current environment, he said his “favorite sectors” remain Information technology, consumer discretionary, industrials and financials, the last of which he called his “contrarian pick.”
“From a global perspective we remain overweight US equities while maintaining meaningful exposure to both developed and emerging markets on expectations that an economic recovery stateside coming out of the Covid-19 shutdown will help boost economic growth around the world and lead to a global economic recovery (similar to the one the world was experiencing just prior to the trade war between the US and China),” he said.
9:32 a.m. ET: Stocks open sharply lower
Here were the main moves in markets, as of 9:32 a.m. ET:
S&P 500 (^GSPC): -60.66 points (-1.99%) to 2,980.65
Dow (^DJI): -625.31 points (-2.44%) to 24,980.23
Nasdaq (^IXIC): -146.94 points (-1.55%) to 9,437.46
Crude (CL=F): -$1.45 (-4.00%) to $34.81 a barrel
Gold (GC=F): -$24.90 (-1.43%) to $1,712.40 per ounce
10-year Treasury (^TNX): -3 bps to yield 0.669%
8:30 a.m. ET: New York state manufacturing recovers from record lows in June
An index tracking manufacturing activity in the New York region recovered in June from historically weak levels in April and May.
The Empire State Manufacturing index rose to -0.2 in June from -48.5 in May, with businesses reporting “activity held steady in June after deteriorating sharply over the prior two months.” The print was sharply above the consensus estimate for the index to come in at -29.6 for the month.
A subindex tracking future business conditions rose to the highest level in more than a decade, indicating firms’ hopes that conditions would improve in the next six months. Other subindices tracking new orders, shipments, delivery times and inventories were little changed, and employment levels fell slightly.
7:19 a.m. ET Monday: Stock futures extend losses
Here were the main moves in markets, as of 7:19 a.m. ET:
S&P 500 futures (ES=F): 2,972.75, down 62 points or 2.04%
Dow futures (YM=F): 24,912.00, down 624 points, or 2.44%
Nasdaq futures (NQ=F): 9,497.00, down 148 points, or 1.53%
Crude (CL=F): -$0.74 (-2.04%) to $35.52 a barrel
Gold (GC=F): -$23.40 (-1.35%) to $1,713.90 per ounce
10-year Treasury (^TNX): -3.6 bps to yield 0.663%
6:07 p.m. ET Sunday: Stock futures drop more than 1%
Here were the main moves at the start of the overnight session for U.S. equity futures, as of 6:07 p.m. ET:
S&P 500 futures (ES=F): 2,994.75, down 40 points or 1.32%
Dow futures (YM=F): 25,200.00, down 336 points, or 1.32%
Nasdaq futures (NQ=F): 9,542.75, down 102.25 points, or 1.06%