Stocks Drift Higher Tuesday 08/04 15:59
U.S. stock indexes drifted higher Tuesday as Wall Street's big rally eased
off the accelerator.
NEW YORK (AP) -- U.S. stock indexes drifted higher Tuesday as Wall Street's
big rally eased off the accelerator.
The S&P 500 rose 11.90 points, or 0.4%, to 3,306.51 after flipping between
small gains and losses throughout the day. It's the mildest move for the index
in two weeks.
The Dow Jones Industrial Average climbed 164.07 points, or 0.6%, to
26,828.47, and the Nasdaq composite added 38.37, or 0.4%, to close at another
Stock indexes are hanging at or close to their record highs after clawing
back all or most of their sell-off from earlier in the year, and the S&P 500 is
within 2.4% of its all-time high set in February. But caution is still very
prevalent across other markets: Gold rose to another record Tuesday, while
Treasury yields sank as investors sought safety.
Within the stock market, energy companies had the biggest gains after the
price of oil rose. But two in five S&P 500 stocks were lower following a mixed
set of earnings reports.
On the winning end was Take-Two Interactive Software, which rose 5.9%. The
video-game maker reported a profit for the spring that was almost double
year-ago levels as customers stuck at home played Grand Theft Auto and other
games instead of going outside.
It also raised its sales forecast for its fiscal year, a notable move when
many companies have been shy to give any kind of prediction given all the
uncertainty created by the coronavirus pandemic.
On the opposite end was insurer American International Group. AIG fell 7.5%
for one of the larger losses in the S&P 500 even though it reported stronger
results for the latest quarter than Wall Street expected. Some analysts cited
several unusual items that clouded its report, such as COVID-related losses,
which make it difficult to extrapolate how AIG's profits will run from here.
In Washington, meanwhile, negotiations in the Capitol on a big economic
relief package are ongoing. But multiple obstacles remain before a deal can be
struck, one that investors say is crucial for propping up the economy in its
A weekly $600 in federal unemployment benefits has expired, threatening to
crunch the finances of millions of out-of-work Americans. Recent data reports
have shown an uptick in the number of workers filing for unemployment benefits
after a resurgence of coronavirus counts pushed some states to reimpose
restrictions on businesses. Economists expect a report on Friday to show that
U.S. employers added 1.8 million jobs last month, which would be welcome growth
but also a slowdown from June.
The Federal Reserve said last week that it will keep interest rates at their
record low levels, as it continues to pump massive amounts of aid into the
economy. Now, investors are waiting for Congress to do the same.
The yield on the 10-year Treasury note fell to 0.50% from 0.56% late Monday.
It tends to move with investors' expectations for the economy and inflation.
The bond market was much earlier than the stock market to signal the coming
economic disaster from the coronavirus pandemic. It has also remained much more
cautious through the pandemic than the stock market has.
"The dichotomy of low and falling bond yields with ebullient risk asset
markets is confusing, and investors are becoming increasingly nervous as yields
grind lower," Northern Trust Wealth Management Chief Investment Officer Katie
Nixon said in a commentary.
She said part of the drive lower in yields is worry that the economy may
roll into a double-dip recession, which she does not expect. The Fed's promises
to keep short-term rates low and to buy reams of bonds are also helping to keep
a lid on yields, which also helps push investors into stocks.
Gold has been another investment that has moved strongly recently because of
low interest rates and worries about the global economy. Gold for delivery in
December rose $34.70 to settle at $2,021.00 per ounce.
In Europe, Germany's DAX slipped 0.4% to give back some of its big gain from
a day earlier, when reports showed that manufacturing recovered across much of
the continent last month. France's CAC 40 added 0.3%, and the FTSE 100 in
London was up 0.1%.
In Asia, markets were more buoyant. Tokyo's Nikkei 225 gained 1.7%, the Hang
Seng in Hong Kong added 2% and the Kospi in Seoul picked up 1.3%. Stocks in
Shanghai edged 0.1% higher.
Benchmark U.S. crude oil rose 69 cents to settle at $41.70 per barrel. Brent
crude, the international standard, added 28 cents to $44.43 a barrel.