By Christine Idzelis and William Watts
U.S. stocks ended higher Tuesday, with the S&P 500 closing at a record high, as investors assessed corporate earnings reports amid concerns over the coronavirus and Chinese regulatory action against technology stocks.
What did major indexes do?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.21% rose 278.24 points, or 0.8%, to 35,116.40.
The S&P 500 /zigman2/quotes/210599714/realtime SPX -0.11% advanced 35.99 points, or 0.8%, to a record close of 4,423.15.
The Nasdaq Composite /zigman2/quotes/210598365/realtime COMP -0.82% gained 80.23 points, or 0.6%, to 14,761.29.
U.S. stocks couldn’t hold early gains on Monday with the Dow Jones Industrial Average and the S&P 500 both ending lower, while the tech-heavy Nasdaq Composite squeaked out a slight gain. The combined volume on the New York Stock Exchange and Nasdaq was the seventh lowest of the year.
What drove the market?
All three major U.S. stock benchmarks ended higher after choppy trading in the morning.
The market is grappling with “a global macro backdrop of uncertainty,” with investors worried about China’s crackdown on technology companies and the rise in Covid-19 cases, said George Catrambone, head of Americas trading at DWS, in a phone interview Tuesday. Concerns over a potential slowdown in economic growth “is weighing on people’s consciousness” as U.S. stocks trade near all-time highs, he said.
Still, “on a relative value basis, people continue to see equities as an opportunity,” said Catrambone, as investors consider them next to low yields offered in the fixed-income market . They’ve shown a willingness to buy stock-market dips, he said.
Meanwhile, mask mandates have been reintroduced in various U.S. regions including Louisiana and San Francisco to confront the delta strain of the coronavirus after the seven-day average of new coronavirus cases surpassed the peak seen last summer, according to CDC Director Dr. Rochelle Walensky. However, the U.S. on Monday achieved the 70% vaccination target set by President Joe Biden.
Elsewhere in the battle against COVID-19, China announced fresh mass testing in Wuhan , the city where the disease was first discovered.
“The delta variant has emerged as a credible downside risk to market performance, but one that we expect to slow, not derail, the recovery,” said Lauren Goodwin, economist and portfolio strategist at New York Life Investments, in a note.
“Consumers have learned to live with the virus, and the widespread availability of vaccines makes renewed shutdowns politically difficult. Consumers will continue to rely on healthier finances and excess savings to fuel strong spending this year,” she said.
In economic data, U.S. factory orders rose 1.5% in June on stronger demand for airplanes, oil and other industrial goods, but more recent data published Monday showed a weaker-than-expected reading on July U.S. manufacturing activity from the Institute for Supply Management.
Randy Frederick, managing director of trading and derivatives at Charles Schwab, said in an interview Tuesday that he expects the stock market to continue to move “sideways,” and with “slightly elevated volatility.” Although investor sentiment at times shifts amid the uncertainty of the pandemic, he said “every time we get a small dip in the market, the buyers step in very quickly.”
Meanwhile, the 10-year Treasury yield settled near a six-month low Tuesday, with analysts citing concerns over peaking economic growth.
With that in mind, Friday’s July jobs report could attract “special attention,” said Charalambos Pissouros, head of research at JFD Group, in a note, as it pertains to the Federal Reserve’s path toward tapering its monthly asset purchases.
If expectations for strong numbers are met, it could undermine Fed Chairman Jerome Powell’s assertion last week that the jobs market had a long way to go before meeting the central bank’s goals, Piossouros said, potentially reviving speculation over early tapering.