Wall Street gains as US states start to reopen
Despite disapproval from health experts, several US states decides to re-open
US stock markets rose on Monday as more states prepared to lift coronavirus-induced curbs and investors geared up for the busiest week of quarterly earnings reports, including from tech titans Apple and Microsoft.
The risk-on sentiment propped up the US benchmark 10-year Treasury yield US10YT=RR for a second straight session, lifting the rate-sensitive financial index .SPSY by 2.2%. Technology stocks .SPLRCT were also the top boosts for the three main indexes.
Wall Street’s fear gauge slipped for the fourth day to hit its lowest level in more than seven week.
Colorado, Mississippi, Minnesota, Montana and Tennessee were set to join several other states in reopening businesses this week, despite disapproval from health experts as business shutdowns put millions out of work across the country.
Although trillions of dollars in stimulus have helped the S&P 500 .SPX recover nearly 30% from March lows, analysts say more gains may be capped with the economic damage growing, unless there is progress on treatments for the disease.
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“There will certainly be a tsunami of negative news that will come crashing down on markets and investors. That is consensus. We have that assumption baked in,” said Art Hogan, chief market strategist at National Securities in New York.
“What we don’t know is what the world looks like on the other side of this, and how much of the potential economic damage will be mitigated by the historic policy response.”
With the Bank of Japan rolling out more stimulus on Monday, focus this week will be on the Federal Reserve’s meeting ending on Wednesday, although expectations are low for more easing by the US central bank.
At 10:24 a.m. ET, the Dow Jones Industrial Average .DJI was up 203.28 points, or 0.85%, at 23,978.55, the S&P 500 .SPX was up 28.22 points, or 0.99%, at 2,864.96. The Nasdaq Composite .IXIC was up 98.14 points, or 1.14%, at 8,732.66.
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About 173 companies in the S&P 500 are scheduled to report quarterly earnings this week, including Apple (AAPL.O), Amazon.com (AMZN.O), Microsoft (MSFT.O), Boeing (BA.N), Ford (F.N), General Electric (GE.N) and Chevron (CVX.N).
Overall, analysts expect a decline of nearly 15% in first-quarter earnings of S&P 500 companies, with profits for the energy sector estimated to have slumped 68%.
Apple Inc (AAPL.O) slipped 0.3% as a report said the company was delaying the production ramp-up of its flagship iPhones coming later this year by about a month.
Caterpillar Inc (CAT.N) fell 1.1% and was the biggest decliner among Dow constituents as Morgan Stanley downgraded the heavy equipment maker to “underweight”.
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Energy stocks .SPNY dropped 0.6% as oil prices plunged yet again on concerns over scarce storage capacity.
Advancing issues outnumbered decliners by a 3.01-to-1 ratio on the NYSE and a 4.07-to-1 ratio on the Nasdaq.
The S&P index recorded four new 52-week highs and no new low, while the Nasdaq recorded 39 new highs and four new lows.