S&P 500, Nasdaq open at records on hopes that spread of coronavirus is slowing


© Getty Images Federal Reserve Chairman Jerome Powell before the House Budget Committee last November. Powell is due to deliver testimony before lawmakers Tuesday morning.

U.S. stocks opened modestly higher Tuesday, but enough to carve out fresh records for the S&P 500 and the Nasdaq, with investors attributing continued optimism surrounding equities to signs of a slowdown of cases of the deadly coronavirus in China.

Load Error

Investors also will watch congressional testimony from Federal Reserve Chairman Jerome Powell, who, in prepared remarks, reiterated that the central bank will be monitoring the novel viral outbreak.

What are major indexes doing? The Dow Jones Industrial Average (DJIA) was up 61 points or around 0.2%, to 29,341, while the S&P 500 (SPX) advanced 13 points or 0.4% to trade at 3,365. The Nasdaq Composite Index (COMP) rose 37 points to 9,664, a climb of 0.4%.

On Monday, both the S&P 500 and Nasdaq closed at records.

What’s driving the market?

China’s National Health Commission on Tuesday said in its daily update that 108 deaths were reported in the previous 24 hours, bringing the total to 1,016 deaths in mainland China since the disease emerged in December. The number of new, confirmed cases fell to 2,478 from 3,062 a day earlier, bringing the total to 42,638 on the mainland, including some of whom have since recovered and been released from treatment.

“Sadly the coronavirus crisis continues to rumble on, but it seems the rate of infections is slowing, so traders have taken that as a positive sign,” said David Madden, market analyst at CMC Markets U.K., in a note.

With some businesses in China are going back to work after an extended Lunar New Year holiday aimed at containing the virus, investors “are starting to question the initial reaction to the health crisis. Those brave enough are stepping back into the market as they feel the selloff was overdone at the start of the situation,” he said.

Powell will deliver remarks before the House Financial Services Committee Tuesday morning, followed by an appearance Wednesday before the Senate Banking Committee. In testimony released ahead of the hearing,the Fed chairman said the central bank is monitoring the coronavirus impact on global economic growth, but added that the U.S. economy appeared resilient to overseas headwinds.

Read: Longtime bull says he’s sitting on cash ahead of a possible market correction

On the economic front, the National Federation of Independent Business said its index of small-business optimism rebounded from a dip at the end of 2019, rising to 104.3 points in January from a December reading of 102.7.

Data on job openings for December is due at 10 a.m. Eastern, while fourth-quarter household debt figures are scheduled for release at 11 a.m. Eastern.

Which other Fed speakers are ahead?

Investors will hear from other Fed officials on Tuesday, with San Francisco Federal Reserve Bank President May Daly taking part in a fireside chat in Dublin, while St. Louis Fed President James Bullard is scheduled to deliver a speech in St. Louis at 1:30 p.m. Neither Daly nor Bullard are voting members of the central bank’s rate-setting Federal Open Market Committee this year.

Minneapolis Fed President Neel Kashkari, who is a voter, is scheduled to participate in a town-hall discussion in Kalispell, Mont., at 2:15 p.m.

Opinion: What money flows and mutual funds really say about the stock market’s future

Which companies are in focus

  • Shares of T-Mobile US

(TMUS)and Sprint (S) surged after The Wall Street Journal said that a federal judge was about to approve their merger. Sprint’s stock was up more than 70% on Tuesday.

  • Shares of Under Armour Inc.(UA) dropped 15.7% after the maker of athletic apparel reported fourth-quarter earnings and revenue that missed expectations and provided downbeat guidance.
  • Home Depot Inc.(HD) said Tuesday it would hire 80,000 people for its spring season, the same number as last year. Shares were seeing little action.
  • Shares of Slack Technologies Inc.(WORK) were down 5.8%, after the company poured cold water on a news report that said International Business Machines Corp. (IBM) would bring the service to its employees world-wide. Slack said IBM had already been its largest customer for several years and wouldn’t update its financial guidance. Shares of Slack were halted late Monday when they were up 15%.
  • Goodyear Tire shares (GT)slumped 8.2% after it reported revenues and earnings below analyst expectations. It also said that its China operations had been disrupted by the coronavirus outbreak.
  • How are other markets trading?

    In bonds, the 10-year Treasury note yield(BX:TMUBMUSD10Y) rose 3 basis points to 1.578%. Bond prices move in the opposite direction of yields.

    The ICE U.S. Dollar index (DXY) was down less than 0.1%, but has gained against its major rivals by around 2.5% year-to-date.

    West Texas Intermediate crude futures for March delivery (CLH20) climbed $1.04, or 2.1% to $50.61 a barrel on the New York Mercantile Exchange. In precious metals, gold for April delivery(GCJ20) fell $4.10 to $1,575.3 an ounce on Comex.

    In Europe, stocks traded sharply higher, with the Stoxx Europe 600 index (XX:SXXP) up 0.8%. In Asia, the CSI 300 (XX:000300) the benchmark for mainland China listed stocks, gained 0.9%.

Powered by WPeMatico