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US open: Stocks open higher despite spike in new Covid-19 cases

By Iain Gilbert

Date: Monday 29 Jun 2020

US open: Stocks open higher despite spike in new Covid-19 cases

(Sharecast News) - Stocks opened higher on Monday despite a spike in new coronavirus cases in certain US states over the weekend.
As of 1545 BST, the Dow Jones Industrial Average was up 1.56% at 25,406.35, while the S&P 500 was 0.90% firmer at 3,036.25 and the Nasdaq Composite came out the gate 0.53% stronger at 9,808.92.

The Dow opened 390.80 points higher on Monday, reversing around half of the losses recorded in the final session of last week after 45,255 additional coronavirus cases were reported on Friday alone.

On Saturday, Florida reported a single-day increase of 9,636 on Saturday and an additional 8,577 on Sunday, after authorities had already again banned drinking at bars across the state.

Texas has also rolled back some of its reopening plans as a result of record spikes in infections, while Arizona Governor Doug Ducey warned that new Covid-19 cases were "growing fast across all age groups and demographics".

Health and human services secretary Alex Azar warned over the weekend that the "window is closing" for the country to stem the outbreak.

However, despite the flurry of negative Covid-19 headlines, financial markets continued to err on the positive side of cautious.

Oanda's Craig Erlam said: "There's a huge question mark hanging over the stock market recovery , with investors seemingly not currently pricing in the prospect of restrictions could be re-imposed across the globe. I'm not saying we're going to see a repeat of the late March/April period but a significant setback in the process now looks perfectly feasible, further threatening the economic recovery and may the longer-term prospects.

We're not exactly seeing markets come under any significant pressure but the momentum that carried it for much of the second quarter has clearly waned. Vulnerabilities are starting to appear, possibly hinting at an end of summer correction as the economic reality doesn't catch up fast enough. While all of this would make a lot of sense, it's so difficult to bet against the stock market when there's so much stimulus backing it."

On the macro front, pending home sales spiked an astonishing 44.3% month-on-month in May compared, according to the National Association of Realtors, beating expectations of a 15% rise. However, sales were still 5.1% lower year-on-year.

Elsewhere, economic activity in Texas' manufacturing sector declined at a softer than expected pace in June, with the General Business Activity Index of the Federal Reserve Bank of Dallas' Manufacturing Outlook Survey coming in at -6.1.

The reading followed May's print of -49.2 and came in much better than the anticipated print of -59.

Still to come, San Francisco Fed president Mary Daly will deliver a speech at 1600 BST and New York Fed head John Williams will make an address at 2000 BST.

On the corporate front, Boeing shares flew 7.08% higher at the open after the aeronautical manufacturer was granted certification by the Federal Aviation Administration to resume test flights of its beleaguered 737 Max aircraft, while Facebook stocks slipped at the bell after Starbucks, Coca Cola and Diageo all announced they would halt their social media advertising campaigns as part of an effort to force the platform to cut down on hate speech and disinformation.


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