Tuesday June 30th

30-06-2020

Stocks set to fall after Monday’s big rally, with Dow futures sliding more than 100 points

U.S. stock index futures slipped Tuesday ahead of the final trading day of a volatile month for markets. Dow Jones Industrial Average futures traded 126 points lower, or 0.5% and implied a loss of 92 points at the open. S&P 500 and Nasdaq-100 futures slid 0.4% and 0.3%, respectively. Shares of Wells Fargo ticked 1.4% lower in the premarket after the bank said Monday it would likely slash its dividend in the third quarter to comply with the Federal Reserve stress test. Bank of America, Citi, JPMorgan and Goldman Sachs said their dividends would stay the same. Stocks that would benefit from the economy reopening were also under pressure. Wynn Resorts slid 1.6% and United Airlines dropped 1.1%. Delta Air Lines traded 1.1% lower. Shares of chip stock Micron jumped 5.3% following the company’s better-than-expected earnings report. Micron gave strong forward revenue guidance. Shares of Lululemon gained 4% on news it will acquire at-home fitness company Mirror for $500 million. Federal Reserve chair Jerome Powell and Treasury Secretary Steven Mnuchin will testify before the House Financial Services Committee at 12:30 p.m. on Tuesday. The joint hearing will address the Fed and Treasury’s response to the coronavirus pandemic. In remarks he will deliver Tuesday, Powell said uncertainty reigns over the outlook for the economy in the wake of the coronavirus pandemic. “Output and employment remain far below their pre-pandemic levels. The path forward for the economy is extraordinarily uncertain and will depend in large part on our success in containing the virus,” Powell said. “A full recovery is unlikely until people are confident that it is safe to reengage in a broad range of activities. “The path forward will also depend on the policy actions taken at all levels of government to provide relief and to support the recovery for as long as needed,” Powell added. The Conference Board’s consumer confidence index will be released at 10 a.m. on Tuesday. Economists polled by Dow Jones are expecting a read of 91 in June, up from May’s reading of 86.6. On Monday, the Dow climbed 580 points, helped by a 14.4% gain in Boeing’s stock, as certification flights for the Boeing 737 Max began Monday. The S&P 500 also registered a gain, climbing 1.5%. Monday’s gains brought the 500-stock index into positive territory for the volatile month of June. The Nasdaq Composite rose 1.2%, helped by gains in Netflix, Microsoft, Facebook and Apple. “It wasn’t a day where the sole driving force was simply rising expectations of continued economic improvement because the best five sector performances [Monday] comprised two cyclical sectors — industrials and materials— a growth sector— communication services —  and two defensive sectors — utilities and staples,” Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC. Monday “was characterized by broad participation in a strong rally.” Monday’s sharp gains came amid a backdrop of increasing coronavirus cases in the U.S. and states attempt to reopen from the shutdown. U.S. governors are walking back or delaying reopening plans as Covid-19 cases climb around the country. New Jersey Gov. Phil Murphy announced the state will delay a resumption of indoor dining that was planned for Thursday. Despite the recent uptick in cases, stocks are headed for a month of gains in June. The Dow is up 0.8% and the S&P 500 is up 0.3% in June. The technology-heavy Nasdaq Composite has returned more than 4% this month. Stocks in Asia Pacific rose on Tuesday as China’s official manufacturing Purchasing Manager’s Index for June came in above expectations. Mainland Chinese stocks were also higher on the day, with the Shenzhen component jumping 2.042% to approximately 11,992.35 while the Shanghai composite was up 0.78% to about 2,984.67. Hong Kong’s Hang Seng index advanced 0.25%. The Nikkei 225 in Japan rose 1.33% to close at 22,288.14, following its more than 2% slide on Monday. The Topix index also added 0.62% to finish its trading day at 1,558.77. In South Korea, the Kospi closed 0.71% higher at 2,108.33. Oil prices fell on Tuesday as optimism for a straightforward recovery in fuel demand faded and a looming increase in supply weighed on the market, with Libya’s state oil company flagging progress on talks to resume exports. U.S. West Texas Intermediate (WTI) crude futures fell 51 cents, or 1.28%, to trade at $39.19 per barrel, having jumped 3% on Monday. Brent crude futures for September fell 17 cents, or 0.2%, to $41.68 a barrel, paring Monday’s 92-cent gain. The less active August contract, which expires on Tuesday, fell 52 cents, or 1.25%, to trade at $41.17 per barrel, after gaining 69 cents on Monday. Gold prices held steady on Tuesday and were heading for their biggest quarterly rise in more than four years as fears over rising coronavirus cases around the world boosted demand for the safe-haven metal. Spot gold was mostly unchanged at $1,770.77 per ounce by 0052 GMT, just $8.29 shy of a near eight-year high of $1,779.06, hit last week. Bullion, with more than 12% gains this quarter, is on track for its best quarter since end-March 2016. Gold was also headed for its third straight monthly gain. U.S. gold futures were flat at $1,781.20.