Monday July 27th

27-07-2020

Stock futures rise with coronavirus stimulus and big earnings in focus; gold soars to record

U.S. stock index futures rose early Monday as investors braced for a big week of corporate earnings and lawmakers continued coronavirus stimulus negotiations. Dow Jones Industrial Average futures rose 58 points, or about 0.15%. The move pointed to a gain of about 15 points at the open. S&P 500 futures added 0.3%. Nasdaq 100 futures gained 0.7%. Apple climbed 1.1% and Amazon shares added about 1.7% in premarket trading after both lost more than 5% last week. The moves in the futures market came as gold prices soared to a new record high. Spot gold traded as high as $1,943.927 before paring gains to change hands at around $1,930.91. Those levels eclipsed the previous record high price set in September 2011. McDonald’s, Pfizer, Alphabet, Apple and AMD are among the companies slated to release their latest quarterly figures this week. Through Friday’s close, 128 S&P 500 companies had reported earnings, with 81% beating analyst expectations, according to Refinitiv. However, overall S&P 500 earnings have fallen more than 40% from the year-earlier period as the coronavirus pandemic takes a big bite out of corporate profits. “Stock prices have soared even as analysts’ consensus expected earnings estimates have plunged,” said Ed Yardeni, chief investment strategist at Yardeni Research. “These estimates have started to show signs of bottoming in the past few weeks. However, any recovery could be dampened or even aborted if the Covid-19 case count continues to mount and state governors slow or reverse the lifting of lockdown restrictions.” Traders also turned their eyes to Washington as lawmakers tried to push forward on another coronavirus stimulus package. On Sunday, Treasury Secretary Steven Mnuchin said Republicans had finalized a bill for about $1 trillion in coronavirus relief funds. Mnuchin added he hopes the proposal can find bipartisan support. However, Jefferies Chief Economist Aneta Markowska warned there “is still a wide gap between the GOP and Democrats, especially on unemployment benefits and state and local gov’t aid. Closing the gap will probably take more than a week, which means that an agreement is unlikely to be reached before July 31.” White House economic advisor Larry Kudlow shed some light on some of the measures included in the GOP proposal, noting: “There’s a $1,200 check coming, that’s going to be part of the new package.” Wall Street was coming off a losing week as shares of major tech companies struggled and U.S.-China tensions rose. The Dow and S&P 500 each snapped a three-week winning streak. The Nasdaq, meanwhile, posted its first back-to-back weekly losses since May. Asia markets mostly rose on Monday as investors continued to watch for developments on issues such as the coronavirus pandemic. Stocks in Taiwan led gains among the region’s major markets as the Taiex soared 2.31% to close at 12,588.30, with shares of Taiwan Semiconductor Manufacturing Company up nearly 10%. South Korea’s Kospi also saw gains as it rose 0.79% to end its trading day at 2,217.86. Mainland Chinese stocks were higher on the day, with the Shanghai composite up 0.26% to about 3,205.23 while the Shenzhen component added 0.318% to around 12,976.87. Hong Kong’s Hang Seng index was 0.35% lower, as of its final hour of trading. On the economic data front, China’s industrial profits for June soared 11.5% year-on-year, according to the country’s National Bureau of Statistics. Japanese stocks were mixed by the end of their trading day, with the Nikkei 225 slipping 0.16% to 22,715.85 while the Topix index edged 0.24% higher to 1,576.69. Oil prices reversed losses and turned positive on Monday, but gains were capped as rising coronavirus cases and tensions between the United States and China pushed investors toward safe-haven assets. Brent crude gained 13 cents, or 0.3%, to trade at $43.47 per barrel while U.S. West Texas Intermediate crude was at $41.44 a barrel, up 15 cents. Gold touched record prices as worries over issues such as the coronavirus pandemic as well as U.S.-China tensions weighed on investor sentiment. Spot gold traded up more than 2% at about $1,941.11 per ounce after earlier trading as high as $1,943.9275 per ounce. Those levels eclipsed the previous record high price set in September 2011. Gold futures were also up 2% to $1,938.70.