Market Snapshot: Dow treads water in afternoon trade as investors focus on rising coronavirus cases, path to economic restart

U.S. stocks are up slightly Wednesday afternoon, but well off their best levels, as investors monitor an acceleration of coronavirus infections in the U.S. that could undermine the strength of the economic rebound.

How are benchmarks performing?

The Dow Jones Industrial Average
DJIA,
+0.14%

rose 11 points, or less than 0.1%, to 25,903, after trading as high as 26,109.49 at the start of the session. The S&P 500
SPX,
+0.24%

climbed 5 points, or 0.2%, to 3,150. The Nasdaq Composite
COMP,
+0.83%

added 75 points, or 0.7%, to 10,419.

On Tuesday, the Dow tumbled 396.85 points, or 1.5%, to end at 25,890.18; the S&P 500 index shed 34.40 points, or 1.1%, closing at 3,145.32 and ending a 5-session win steak; while the Nasdaq Composite Index fell 89.76 points, or 0.9%, to finish at 10,343.89, after carving out an intraday 10,518.98 record on Monday.

What’s driving the market?

Equity markets were holding on to modest gains Wednesday as investors focused on if unabated increases in COVID-19 cases in a number of U.S. states will damper further stock price increases.

The U.S. reported 60,000 new coronavirus cases Tuesday, a single-day record, according to data compiled by Johns Hopkins University. The seven-day average for cases is higher than the 14-day average, an indication that the spread is intensifying, according to a Wall Street Journal analysis of the publicly available health data.

“The single-day spike kind of woke some investors up,” Lindsey Bell, Ally Invest’s chief investment strategist, told MarketWatch. Although, Bell also expects the approaching corporate earning season to provide reason for optimism, if only by showing the worst damage from the crisis has passed.

“Earnings expectations are still pretty dire, but it looks like the second-quarter will be the bottom, and that there will be improvement in the third and fourth quarter, even if there are double-digit declines,” she said. “Investors are hopeful that 2021 is going to be a heck of a lot better than 2020.”

Overall, more than 2.93 million coronavirus cases have been confirmed in the U.S. along with at least 130,306 deaths. Texas and Florida have become the epicenters of the recent resurgence, with Florida reporting 7,361 cases on Tuesday and Texas recording more than 10,000 infections—the highest one-day increase in infections thus far.

“I think we’re in a collective pause mode in terms of both the economy and markets trying to assess what the health situations are like in Arizona, Texas. Are they going to get worse? Is it a precursor to what’s going to happen in other states?” said Yung-Yu Ma, chief investment strategist at BMO Wealth Management, who said in an interview that investors would wrestle with such questions in the next few weeks.

The broader market, with the exception of the technology-laden Nasdaq, have traded in a relatively tight range since a recent peak on June 8 for the S&P 500 index and the Dow, as stalled business reopenings threaten the prospects of a V-shaped, or quick and sharp, recovery from a deep recession, barring a vaccine or effective treatments of the deadly illness.

Investors also were weighed a late Tuesday report from Bloomberg News that top advisers to President Donald Trump have advocated undermining the Hong Kong dollar’s peg to the U.S. dollar, as a retaliation for Beijing’s new security law imposed on the semiautonomous state.

The report said that such a proposal faces opposition and may harm the U.S. as much as China, but still highlights the potential for further erosion in the relationship between the world’s two largest economies.

“As we get closer to the election, the rhetoric will continue to heat up,” said Ma. “But [U.S.-China tensions] is probably not the issue it once was going forward.”

Which stocks are in focus?
  • KKR & Co.
    KKR,
    +8.08%

    stock was up 7.9% after it announced Wednesday an agreement to buy retirement and life insurance company Global Atlantic Financial Group Ltd.

  • Walgreen’s Boot Alliances Inc.
    WBA,
    -0.30%

    Shares of
    edged 0.6% higher after the pharmacy chain said it would take a 30% stake in VillageMD as part of its plans to open up 700 new primary care practices at Walgreens stores.

  • TaylorMorrison Home Corp.
    TMHC,
    +13.50%

    said Wednesday that June was its strongest sales month ever. The home builder’s shares surged 13.9%.

  • Shares of Alcoa Corp.
    AA,
    -2.00%

    fell 2.6% Wednesday, after the aluminum products maker provided preliminary second-quarter results that were above analyst expectations, citing productivity gains and cost savings amid challenges resulting from the COVID-19 pandemic.

  • Shares of Nikola Corp.
    NKLA,
    +30.08%

    soared 25.5% Wednesday, putting them on track to snap a five-day losing streak, after J.P. Morgan turned bullish on the battery- and hydrogen-electric truck maker, citing a more attractive valuation following the recent selloff.

  • Instant messaging platform Slack Technologies Inc.
    WORK,
    +8.10%

    said Wednesday it has acquired Rimeto, a provider of business directory services for an undisclosed sum. Slack’s shares rose 8.2%.

  • GoHealth Inc., a health insurance marketplace, set terms for its planned initial public offering on Wednesday, with plan to offer 39.5 million shares priced at $18 to $20 each.
  • United Airlines Holdings Inc.
    UAL,
    -0.79%

    said it would send furlough or layoff warnings to 36,000 employees due to the coronavirus impact on demand for air travel. The airline’s shares fell 2.8%.

How are other assets performing?

West Texas Intermediate U.S. crude futures
CLQ20,
+0.71%

for August delivery rose 24 cents, or 0.6%, to $40.86 a barrel, on the New York Mercantile Exchange. In precious metals, August gold futures
GCQ20,
+0.49%

gained $10.70, or 0.6%, to settle at $1,820.60 an ounce, after hitting its highest level since Sept. 2011 on Tuesday.

The 10-year Treasury note yield
TMUBMUSD10Y,
0.658%

was flat at 0.65%. Bond prices move inversely to yields.

The greenback fell 0.4% a basket of its major rivals, based on trading in the ICE U.S. Dollar Index.
DXY,
-0.45%

In European equities, the Stoxx Europe 600 index
SXXP,
-0.67%

fell 0.7%, and London’s FTSE 100
UKX,
-0.54%

was down 0.6%. In Asia markets, China’s benchmark CSI 300 Index
000300,
+1.61%

gained 1.6%, extending its weekly rally. Hong Kong’s Hang Seng Index
HSI,
-1.09%

rose 0.6%.

Mark DeCambre provided additional reporting