Wall Street closed higher after a choppy session on Wednesday buoyed by good news from coronavirus treatment front and possible injection of fresh stimulus by the U.S. government. However, investors remained concerned about eco-political intensions between the United States and China. All three major stock index ended in the green.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) maintained its three-day winning streak gaining 0.6% or 165.44 points to close at 27,005.84. This was the first closing of the blue-chip index above 27,000 since Jun 9. Notably, 24 components of the 30-stock index ended in the green while 6 closed in red. The Nasdaq Composite ended at 10,706.13, rising 0.2% reversing its previous day’s decline.
Meanwhile, the S&P 500 advancing 0.6% to end at 3,276.02, continuing its four-day winning run. Utilities Select Sector SPDR (XLU) gained 1.5% while the Energy Select Sector SPDR (XLE) dropped 1.2%. Notably, ten out of eleven sectors of the benchmark index closed in positive territory while one in negative territory.
The fear-gauge CBOE Volatility Index (VIX) was down 2.1% to 24.32. A total of 10.32 billion shares were traded on Wednesday, lower than the last 20-session average of 11.28 billion. Advancers outnumbered decliners on the NYSE by a 1.57-to-1 ratio. On Nasdaq, a 1.17-to-1 ratio favored declining issues.
Positive Development on COVID-19 Treatment
The U.S. government has decided to pay $1.95 billion jointly to Pfizer Inc. PFE and BioNTech SE BNTX for the vaccine that they are jointly developing for the potential treatment of COVID-19. The Department of Health and Human Services will procure 100 million coronavirus vaccines if it proves to be safe and effective or receive emergency use authorization by the FDA.
Per the agreement, the government can procure another 500 million doses of the drug. Both stocks carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Expectations of a Fresh Stimulus
The U.S. government is expected to unveil another $1 trillion of fiscal stimulus, much lower than $3.5 trillion proposed by Senate Democrats. The investors’ are expecting around $1.5 trillion of fresh stimulus. Notably, the government already injected $2 trillion of fiscal stimulus in April.
Senate Majority Leader Mitch McConnell said Congress is unlikely to pass a new fiscal stimulus bill before recess starts in early August. Meanwhile, CNBC reported that Republicans are considering to provide $400 per month as unemployment benefit till the end of this year. The current stimulus of providing $2,400 per month unemployment benefit will come to end this month.
U.S.- China Tensions Intensify
The lingering economic and geo-political conflicts between the United States and China have heightened recently. On Jul 22, The U.S. government has instructed China to close its consulate in Houston citing the consulate was used for spying purposes.
The U.S. government has already imposed trade sanctions on 11 major Chinese companies on accounts of violating human rights in China. On Jul 21, the Department of Justice indicted two Chinese hackers of stealing trade secrets and trying to steal research on drugs for potential coronavirus treatment.
The National Association of Realtors reported that existing home sales jumped 21% in June to 4.72 million units, marking its best monthly performance since the inception of this metric in 1968. However, the consensus estimate was 4.77 million units. Notably, existing home sales plunged 11.3% year over year.
Energy Information Administration reported that crude inventories rose by 4.9 million barrels in the week to July 17 to 536.6 million barrels. Consequently, Brent crude dropped $0.03 to settle at $44.29 per barrel while the West Texas Intermediate crude lost $0.02 at $41.90 per barrel.
Stocks That Made Headline
CSX Q2 Earnings & Revenues Miss on Coronavirus-Led Weak Volumes
CSX Corp. CSX reported lower-than-expected results in second-quarter 2020 due to reduced economic activity on account of coronavirus. (Read More)
NVIDIA (NVDA) Interested to Acquire SoftBank’s Arm Unit
NVIDIA Corp. NVDA has reportedly expressed interest in acquiring SoftBank Group’s chip designing business unit Arm Ltd. (Read More)