S&P 500 and Nasdaq open at intraday records though ADP private-sector jobs report disappoints


U.S. equity benchmark indexes were trading at or near record territory early Wednesday, as investors drew hope from progress in the development of tests and vaccines for COVID-19 along with the potential for another fiscal stimulus package in Washington.

Investors were also digesting a private-sector jobs report that came in weaker than expected, well below the nearly 1 million that had been estimated for the month. An account of business conditions in parts of the U.S. from the Federal Reserve is due later in the afternoon.

How are the benchmarks performing?

The Dow Jones Industrial Average
US:DJIA
gain 120 points, or 0.4%, at 28,753, the S&P 500 index
US:SPX
climbed 14 points, or 0.4%, at 3,541, after hitting an intraday record at 3,546,41, while the Nasdaq Composite Index
US:COMP
advanced 81 points to reach 12,000, a gain of 0.6%, following its own intraday all-time high at 12,050.46.

On Tuesday, the Dow rose 215.61 points to end at 28,645.66, or 0.8% higher, the S&P 500 index  added 26.34 points to close at a record 3,526.65, a gain of 0.8%, after setting an intraday record of 3,528.03; while the Nasdaq Composite Index advanced 165.21 points to a record 11,939.67 finish, a rise of 1.1%, after touching a new intraday all-time high of 11,945.72.

What’s driving the market?

Stock markets looked upbeat early Wednesday, with a number of possible catalysts helping the investing mood amid the coronavirus pandemic. Bloomberg reported that U.S. Treasury Secretary Steven Mnuchin has again restarted talks with House Speaker Nancy Pelosi, sparking fresh hope of another fiscal stimulus plan to help out-of-work Americans.

On the health front, the leading health expert Dr. Anthony Fauci said that a COVID-19 pandemic could come sooner than expected if the roster of companies attempting to achieve a cure are able to produce outstanding preliminary results.

Speaking to Kaiser Health News, Fauci said that the board that is overseeing vaccine approvals could decided that “the data is so good right now that you can say it’s safe and effective.”

The global tally for confirmed cases of the coronavirus that causes COVID-19 climbed to 25.8 million on Wednesday, according to data aggregated by Johns Hopkins University, while the death toll rose to 857,552

Early moves in the session come a day after buying in large-capitalization technology stocks and shares tied to pandemic stay-at-home trends led the S&P 500 index to record its 21st record close of 2020 and the Nasdaq Composite its 41st on Tuesday.

Meanwhile, investors assessed a report from Automatic Data Processing Inc
US:ADP
that said 428,000 private-sector jobs were created in August, missing expectations for a gain of 900,000 jobs, according to a consensus of estimates surveyed by Econoday.

ADP did, however, raise last month’s jobs figure to 212,000 for July from a rise of 167,000, which was then below forecast of 1.9 million jobs.

The economy has recouped fewer than half of the 20 million-plus jobs lost in the early stages of the coronavirus pandemic.

In other news, the Centers for Disease Control and Prevention late Tuesday implemented a temporary eviction moratorium through the end of the year, protecting millions of U.S. renters from losing their homes during the COVID-19 pandemic, the Trump administration announced.

Other economic data, will be watched, including the Federal Reserve’s Beige Book, an anecdotal account of business conditions in the central bank’s districts set to be released at 2 p.m. ET, and before that a report on factory orders for July is due.

Which stocks are in focus?
  • Shares of Macy’s Inc.
    US:M
    shot up Wednesday, after the department store chain reported a fiscal second-quarter loss that was much narrower than expected as net sales topped forecasts.

  • Vera Bradley Inc. shares
    US:VRA
    soared Wednesday, after the handbag and accessories retailer posted a surprise profit for the second quarter.

  • Shares of DraftKings
    US:DKNG
    rallied Wednesday after the company added basketball legend Michael Jordan as an adviser to the company.

  • Shares of Peloton Interactive Inc.
    US:PTON
    ran up 7.9% toward record territory Wednesday, extending the 25.9% rally over the past six sessions, after J.P. Morgan analyst Doug Anmuth boosted his price target to the highest among Wall Street analysts, citing optimism ahead of next week’s earnings report.

  • Shares of Jack Daniel’s parent Brown-Forman Corp.
    US:BF
    fell Wednesday, although the alcohol brands company reported fiscal first-quarter results that beat expectations, although gross margin contracted as price/mix decreased.

  • Shares of ServiceMaster Global Holdings Inc.
    US:SERV
    were up Wednesday, after the termite and pest control company said it’s selling its ServiceMaster Brands franchise business for $1.55 billion to Roark Capital.

  • Clothing retailer Guess Inc. shares
    US:GES
    soared Wednesday, after the company blew past estimates for its fiscal second quarter.

How are other assets trading?

The Stoxx Europe 600
XX:SXXP
traded 1.8% higher, while U.K.’s FTSE 100 benchmark
FR:UKX
headed 1.5% higher on Wednesday.

The yield on the 10-year Treasury note
BX:TMUBMUSD10Y
added 0.6 basis point at 0.68%. Bond prices move inversely to yields.

Gold
US:GCZ20
shed $9.40, or 0.5%, at $1,969.90 an ounce, pulling back from its highest settlement in about two weeks on Tuesday. West Texas Intermediate crude for October delivery
US:CL
traded 20 cents higher, or 0.5%, at $42.95 a barrel on the New York Mercantile Exchange.

The ICE U.S. Dollar Index
US:DXY,
which tracks the currency versus a basket of six major rivals, rose 0.3% at 92.637 after trading down earlier in the session.

In Asia, China’s CSI 300
XX:000300
closed less than 0.1% higher and Hong Kong’s Hang Seng
HK:HSI
finished 0.3% lower. Japan’s Nikkei 225
JP:NIK
rose 0.5%, while the South Korea’s Kospi
KR:180721
gained 0.6%.



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Dow fights for altitude early Tuesday as big tech stocks lead Nasdaq to fresh intraday record


U.S. stock indexes attempted to push higher Tuesday morning, as the buying momentum on Wall Street refused to be deflated, even as investors enter what is expected to be a seasonally challenging month for equities, following the best August returns in more than 30 years.

How are stock benchmarks performing?

The Dow Jones Industrial Average
DJIA,
+0.04%

was up 2 points at 28,433, a less-than 0.1% rise, reversing an opening slide; the S&P 500 index
SPX,
+0.18%

added 7 points to reach 3,507, a rise 0.2%; while the Nasdaq Composite Index
COMP,
+0.77%

advanced 87 points at 11,861, a rise of 0.7%, touching a record intraday high at 11,865.66.

On Monday, the Dow shed 223.82 points, or 0.8%, to end at 28,430.05. The S&P 500
SPX,
+0.18%

fell 7.70 points, or 0.2%, ending at 3,500.31. The Nasdaq rose 79.82 points, 0.7%, to end at a record 11,775.46, its 41st record close of 2020.

The S&P 500 clinched its best August return since 1986 and the Dow its best return for that month since 1984, while the Nasdaq recorded its strongest August since 2000

What’s driving the market?

Buying of large-capitalization growth and technology stocks, a major theme of trading since the coronavirus pandemic took hold in March, appeared set to continue to start trade in September.

Tesla and Apple, underscored that theme early Tuesday, with shares of the electric-vehicle maker and the iPhone creator on pace to extend a rally after splitting their popular shares on Monday.

Still, investors are anxious going into the new month as they wrestle with stock valuations elevated against a backdrop of a Federal Reserve that has implied that it will keep rates ultra-low even if inflation pressures begin to percolate.

Read: The stock market is on a tear, but now comes September, the worst month of the year

“Technology has regained leadership with broad-based movement back to new highs, and Growth dominating, but bifurcation is growing larger,” Mark Newton, technical analyst at Newton Advisors, said.

He cautioned that breadth, or the number of stocks rising versus those declining, is offering a cautious sign. “Breadth has tailed off ‘big-time’ with more than 5 occurrences in the last few weeks of more decliners than advancing issues,” he said.

Read:Here’s what could trigger more stock market pullbacks this year, says Schwab trading expert

The Fed’s new stance on inflation targeting is still being digested on Wall Street and has so far resulted in more pressure on the U.S. dollar, a factor that may also support further buying in stocks that boast large overseas businesses.

In U.S. economic news, the seasonally adjusted IHS Markit final manufacturing sector purchasing managers’ index rose to 53.1 in August, down slightly from the previously released ‘flash’ estimate of 53.6, but up from 50.9 at the start of the third quarter to post the fastest expansion since January 2019.

A closely watched PMI report on manufacturing activity from the Institute for Supply Management for August is due at 10 a.m., with a consensus forecast for 54.7.

Overnight the eurozone IHS manufacturing purchasing managers index pointed to improving conditions in August, as the region’s recovery from the coronavirus pandemic continued, while in China the Caixin purchasing managers index, which is weighted toward small, private manufacturers, rose to 53.1 in August from 52.8 in July.

A report on U.S. construction spending for July also is due at 10 a.m., with report on motor vehicle sales coming throughout the day.

Among Fed speakers, Fed Gov. Lael Brainard is slated to speak at 1 p.m.

Which stocks are in focus?
  • Shares of Tesla Inc.
    TSLA,
    -4.08%

    were down 2.5% on Tuesday after it announced a $5 billion offering, which deflated its momentum after its stock split on Monday.

  • Zoom Video Communications Inc.
    ZM,
    +42.52%

    shares soared 28% early Monday after the company made as much money in May, June and July as it did in all of 2019, beating even the outsize expectations of Wall Street and sending its stock, its recent quarterly results out on Monday revealed.

  • Shares of Eastman Kodak Co.
    KODK,
    +25.20%

    were up more than 36% Tuesday after the company disclosed that D.E. Shaw & Co. has taken a 5.2% stake in the company.

How are other assets trading?

In Asia, China’s CSI 300
000300,
+0.53%

rose 0.5% and Hong Kong’s Hang Seng
HSI,
+0.03%

finished virtually unchanged but in positive territory on the session.

The Stoxx Europe 600
SXXP,
-0.84%

traded 0.1% lower, while U.K.’s FTSE 100 benchmark
UKX,
-1.36%

tumbled 1.5% so far on Tuesday.

The yield on the 10-year Treasury note
TMUBMUSD10Y,
0.716%

added 1.4 basis points to 0.72%, after adding 15.9 basis points during August. Bond prices move inversely to yields.

Gold
GCZ20,
-0.01%

jumped $19.90, or 1%, to $1,998.50 an ounce, trading around its highest level in about two weeks. West Texas Intermediate crude for October delivery
CL.1,
+1.61%

traded 40 cents, or 0.9%, at $43.02 a barrel on the New York Mercantile Exchange.

The ICE U.S. Dollar Index
DXY,
+0.02%
,
which tracks the currency versus a basket of six major rivals, fell 0.3% to extend its decline this year and trade around its lowest level since 2018.



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The stock market is on a tear, but now comes September, the worst month of the year


The only thing to fear about the stock market in September is fear itself.

That’s important because September’s reputation as a poor month for equities is well-known. Since the Dow Jones Industrial Average
DJIA,
+0.56%

was created in the late 1800s, the Dow has fallen an average of 1% in September. The Dow’s gain in all other months averages 0.7%.

There are nevertheless two reasons not to give any weight to this history:

• There is no plausible theory for why September should be awful for the stock market, and without such an explanation, data mining becomes far more likely.

• In any case, the stock market has not, on average, lost ground in September of presidential election years.

Read:The biggest problem in the stock market: Bullishness is clouding investors’ thinking

The lack of a plausible explanation for September’s record is not for want of trying. For many years I have challenged readers to propose one. None that I have received can withstand historical scrutiny.

One of the most widely proposed ideas is that September’s record is caused by tax-loss selling from mutual funds, especially since 1990, because of a new tax law that took effect then. But if that were a plausible explanation, we’d expect September’s record since 1990 to be worse than it was before.

But that’s not the case. The Dow’s average September loss prior to 1990 was four times worse than it’s been since then — minus 1.2% versus minus 0.3%.

Other explanations that have been proposed don’t even meet a simple smell test. One of my favorites is that the stock market in September suffers from pent-up selling from investors who are just returning from their summer vacations. But that explanation could just as easily be turned on its head; why doesn’t the market soar in September from pent-up buying demand?

That could especially be the case this year, given the Federal Reserve’s announcement Thursday suggesting its monetary policy will be even easier than previously thought, for a lot longer than previously thought. The so-called Fed Put is alive and well.

In any case, according to Lawrence Tint, it’s a waste of time trying to find a plausible explanation for September’s dismal record. Tint is the former U.S. CEO of BGI, the organization that created iShares (now part of BlackRock
BLK,
+1.02%

).

“Unless you or I are able to discover something nobody else knows about, by the time we know why a pattern exists, it’s too late to profit from it,” he said in an interview. That’s because, once this discovery is made, “savvy investors would immediately begin jumping the gun by selling in August, others in turn would try to beat them, and the historical pattern would quickly disappear.”

Election-year September

If the discussion up to this point isn’t sufficient to convince you not to fear September, consider this: In September of the average presidential-election year, the stock market actually has risen. This is illustrated in the accompanying chart at the top of this column, which plots the Dow’s average monthly gains back to 1896. Notice that, in presidential-election years, not only does the Dow on average rise in September, but there are also five months that have the worst average returns.

So there you have it. There is no sound theoretical or statistical reason to bet that September is bad for the stock market. But even if there were, you’d still have reason in this election year not to bet on equities suffering in September.

None of this is a guarantee the stock market won’t fall. With five straight months of gains under its belt, the stock market has every right to take a breather — especially in a crazy year like 2020 that has already broken so many historical precedents.

My point is that, should the stock market decline, it won’t be because it’s the ninth month of the calendar.

Mark Hulbert is a columnist for MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com.



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Stock-index futures mostly higher; Dow on track to erase 2020 loss


Stock-index futures traded mostly higher Friday, with the Dow Jones Industrial Average on track to turn positive for the year to date, as investors look for data on consumer spending a day after the Federal Reserve announced a policy shift that would allow employment and inflation run hotter than in the past.

What are major benchmarks doing?

Futures on the Dow Jones Industrial Average
YM00,
+0.45%

rose 135 points, or 0.5%, to 28,603, while S&P 500 futures
ES00,
+0.32%

gained 11.70 points, or 0.3%, to trade at 3,497. Nasdaq-100 futures
NQ00,
+0.09%

were up 5.75 points, or 0.1%, at 11,958.50.

On Thursday, the Dow
DJIA,
+0.56%

rose 160.35 points, or 0.6%, to close at 28,492.27, ltheaving the blue-chip gauge down less than 0.2% for the year to date. The S&P 500
SPX,
+0.16%

ended with a gain of 5.82 points, or 0.2%, at 3,484.55, a record close. The Nasdaq
COMP,
-0.34%
,
which closed at a record on Wednesday, fell 39.72 points, or 0.3%, to close at 11,625.34.

What’s driving the market?

Stocks put in a choppy performance Thursday after Federal Reserve Chairman Jerome Powell announced, in an appearance at the annual Jackson Hole monetary symposium, that the Fed was shifting to a policy of average inflation targeting that would effectively see policy makers end the practice of preemptively hiking interest rates to stave off inflation. Instead, the Fed would allow inflation to run above its 2% target to make up for periods when inflation runs below it — signaling that a long period of ultralow interest rates lies ahead.

Need to Know:The Fed might never hike rates again. Here are growth stocks for the long run, according to one strategist

“Markets haven’t got overexcited by the U.S. Federal Reserve’s new stance on letting inflation run higher, despite it implying that interest rates will stay lower for longer — normally something that would benefit equities. One could argue that the Fed following this path was already expected by the market, hence why stocks haven’t surged ahead,” said Russ Mould, investment director at AJ Bell.

In Asia, Japanese shares fell sharply, leaving the Nikkei 225 Index
NIK,
-1.40%

down 1.4% after Prime Minister Shinzo Abe said he would resign due to illness. Abe, whose term ends in September 2021, is expected to remain in office until a new party leader is elected and formally approved by parliament.

The economic calendar features data on personal income and spending for July at 8:30 a.m. Eastern. Economists surveyed by MarketWatch expect income to fall another 0.4% after a 1.1% drop in June. Spending is expected to show a 1.6% rise after a 5.6% increase in June. A core inflation measure is expected to rise by 0.5%.

Data on advance trade in goods for July is also due at 8:30 a.m. Eastern, and is forecast to show a widening deficit of $71.5 billion versus $70.6 billion in June. A final reading of the University of Michigan’s August consumer sentiment index is set for 10 a.m. Eastern.

Which companies are in focus?
What are other markets doing?

The Shanghai Composite
SHCOMP,
+1.60%

rose 1.6% and the Hong Kong’s Hang Seng Index
HSI,
+0.55%

gained 0.6%. 

The Stoxx Europe 600
SXXP,
-0.17%

was off 0.2%, while U.K.’s FTSE 100 benchmark
UKX,
-0.04%

was up 0.1%. 

The yield on the 10-year Treasury note
TMUBMUSD10Y,
0.749%

TMUBMUSD10Y,
0.749%

was up 0.6 basis point at 0.752%. Bond prices move inversely to yields.

Gold futures
GCZ20,
+1.73%

were up 1.7% at $1,966.40 an ounce. U.S. oil futures
CL.1,
+0.09%

were up 0.1% at $43.07 a barrel.

The ICE U.S. Dollar Index
DXY,
-0.77%
,
which tracks the currency versus a basket of six major rivals,



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Stock-index futures point higher as U.S., China reaffirm commitment to trade deal


Stock-index futures pointed to more gains for Wall Street on Tuesday after U.S. and Chinese officials reaffirmed their commitment to a so-called phase one trade deal.

What are major benchmarks doing?

Futures on the Dow Jones Industrial Average
YM00,
+0.71%

rose 200 points, or 0.7%, to 28,439, while S&P 500 futures
ES00,
+0.44%

ES00,
+0.44%

gained 14.75 points, or 0.4%, to trade at 3,442.25. Nasdaq-100 futures
NQ00,
+0.02%

were up 3 points, or less than 0.1%, at 11,639.25.

The Dow
DJIA,
+1.35%

on Monday rose 378.13 points, or 1.4%, to finish at 28,308.46, leaving it 4.1% away from its record close set on Feb. 12. The S&P 500
SPX,
+1.00%

pushed further into uncharted territory, rising 34.12 points, or 1%, to close at a record 3,431.28. The Nasdaq Composite
COMP,
+0.60%

also ended at a record, rising 67.92 points, or 0.6% to 11,379.72.

What’s driving the market?

Analysts tied a positive tone across global equity markets in part to remarks following a phone call between U.S. and Chinese officials over the status of the partial trade agreement despite rising tensions over Beijing’s treatment of Hong Kong and other issues.

China described the call as a “constructive” discussion between Vice Premier Liu He, the country’s top negotiator, and U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin. The U.S. said both sides “see progress and are committed to taking the steps necessary to ensure the success of the agreement.” The call came after plans for a discussion earlier this month were postponed.

“Given the exchanges between the two countries recently have been negative, any small bit of positivity is seen as a big step forward, even when it isn’t,” said David Madden, analyst at CMC Markets, in a note. “The Chinese government are still well behind on their commitments to purchase US goods, but to be fair, some of that is down to the pandemic.”

Meanwhile, a shake-up of the Dow Jones Industrial Average is in store at the end of the month. S&P Dow Jones Indices late Monday announced that customer relationship management software company Salesforce.com Inc.
CRM,
+0.44%

would replace oil giant Exxon Mobil Corp.
XOM,
+2.95%
,
biotech drugmaker Amgen Inc.
AMGN,
-0.87%

will replace pharmaceutical company Pfizer Inc.
PFE,
-0.10%
,
and software-and-industrial conglomerate Honeywell International Inc.
HON,
+1.18%

will replace defense contractor Raytheon Technologies Corp.
RTX,
+2.67%
.
S&P Dow Jones Indices said the move was prompted by Apple Inc.’s
AAPL,
+1.19%

coming 4-for-1 stock split, which will reduce the blue-chip index’s technology weighting.

The U.S. economic calendar for Tuesday includes the June reading for the Case-Shiller home price index at 9 a.m. Eastern. A consumer-confidence index reading is due at 10 a.m., along with data on July new-home sales.

Which companies are in focus?
  • Shares of Salesforce.com Inc. were up 2.6% in premarket action, following the announcement of its pending addition to the Dow, while shares of Amgen rose 3.8% and Honeywell shares added 3.5%. ExxonMobil shares were off 1.9%, while Pfizer fell 1.2% and Raytheon gave up 2.4%.
  • Shares of Palo Alto Networks Inc.
    PANW,
    -0.83%

    TK after the company delivered results and an outlook that topped Wall Street forecasts after Monday’s closing bell. The company also continued its acquisition spree, saying it would buy incident-response company Crypsis Group for $265 million in cash to support its Cortex XDR platform.



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