Market Snapshot: Dow, S&P extend gains to second straight session, Nasdaq books fresh record close as Apple powers to new high

U.S. stock indexes closed higher Tuesday, with the Nasdaq Composite booking another record close, helped by improving economic data and optimism on Wall Street about the ability of the U.S. to respond to rising COVID-19 cases.

Technology and consumer-oriented stocks led the rally, with Apple posting an all-time record close, as investors responded to announcements from the tech giant’s Worldwide Developers Conference.

How did benchmarks perform?

The Dow Jones Industrial Average DJIA, +0.50% rose 131.14 points, or 0.5%, to close at 26,156.10, supported by gains from Apple AAPL, +2.13%. The S&P 500 index SPX, +0.43% gained 13.43 points, or 0.4%, finishing at 3,131.29. The Nasdaq Composite Index COMP, +0.74% rose 74.89 points, or 0.7%, to end at a new 10,131.37 record, after setting an intraday high.

All three indexes ended off their best levels of the session.

On Monday, the Dow advanced 153.50 points, or 0.6%, to end at 26,024.96. The S&P 500  rose 20.12 points, or 0.7%, to finish at 3,117.86, while the Nasdaq picked up 110.35 points, or 1.1%, closing at a record high of 10,056.47, while booking its seventh day in a row of gains and clinching its longest win streak since Dec. 26, 2019, according to Dow Jones Market Data.

What drove the market?

Early signs of an economic recovery have driven U.S. stock prices higher in recent weeks, as business activity resumes after the lockdowns imposed to combat the coronavirus pandemic, but rising COVID-19 cases, the sensitivity of the market to China-U.S. trade developments and the concentration of technology-related companies propelling the market higher are drawing increased attention on Wall Street.

Dr. Anthony Fauci, the nation’s top infectious disease expert, warned Tuesday that the “next couple of weeks are going to be critical” in terms of the addressing a “disturbing surge” in COVID-19 cases across the United States, while also vowing to ramp up, not slow down, testing for the virus, in testimony before Congress on the federal response to the pandemic. He also reiterated a cautious optimism about the prospects for the development of a vaccine by year’s end or early 2021.

“What’s driving the market right now is guarded optimism around the COVID situation becoming more tolerable, or livable, and a de-escalation of the alarm that rising cases had set off on the past,” said Tony Roth, Wilmington Trust’s chief investment officer, in an interview with MarketWatch.

“I don’t know if that’s going to be the case, or not, but that certainly is what’s driving the market,” Roth said.

Read: Infectious-disease expert says we’re thinking too much about a second wave of COVID-19 when it’s really more like a forest fire

U.S. equity and debt markets also have been bolstered by trillions of dollars’ worth of monetary and fiscal stimulus aimed at blunting the economic shocks created by the pandemic.

Treasury Secretary Steven Mnuchin on Tuesday and he anticipates a new round of coronavirus stimulus to pass Congress in July, while stressing that he also expects China will hold up its end of the Phase 1 trade agreement with Washington.

Trump administration trade adviser Peter Navarro, in a Monday evening interview on Fox News, said the China trade deal was “over.” Minutes later, the adviser said that his comments were “taken wildly out of context.” Trump also tweeted Monday night that the China trade was “fully intact.”

Back on the stimulus front, St. Louis Fed President James Bullard on Tuesday said companies are taking on more debt to stay in business during the health and economic crisis, but that he doesn’t see dangerous asset bubbles forming.

In U.S. economic data, IHS Markit’s preliminary, composite purchasing manager’s index rose to 46.8 in June from 37 in May, highlighting a nascent economic recovery. The data showed the services sector index rose to 46.7 in June from 36.9 in May, and the manufacturing index recovered to 49.6, compared with 39.8 previously. While the indexes are still below the 50 level, suggesting a contraction, they are steadily improving.

Similar data showed an improvement in the eurozone. The purchasing managers composite index for the eurozone — a measure of activity in the manufacturing and services sectors — rose to 47.5 in June from 31.9 in May to reach its highest level since February, the month before lockdowns began in Europe.

New U.S. new home sales also increased 16.6% in May to 676,000 annual rate, compared with estimates for a gain 632,000.

Meanwhile, the Nasdaq Composite’s advantage over the Dow and S&P 500 is the biggest since 1983, while the divergence between the S&P 500 and the Dow is widest since 2002, according to Dow Jones Market Data, highlighting the strength of a handful of stocks, including Apple AAPL, +2.13%, Microsoft M, +0.98%, Facebook FB, +1.26%, Amazon.com AMZN, +1.86% and Google parent Alphabet GOOGL, +0.91% GOOG, +0.86%.

Which stocks were in focus?

• American Airlines Inc. AAL, -6.16% raised nearly $2 billion on Tuesday, partially through an offering of 74.1 million shares at $13.50 apiece, as the airline moves to raise cash and bolster its liquidity position during the coronavirus pandemic. The airline also priced an offering of $1 billion of convertible bonds that mature in 2025 at 6.50%. Shares fell 6.2%.
• Shares of Palatin Technologies Inc. PTN, +23.44% shot up after it said it would test one of its investigational drugs as a treatment for COVID-19. Shares closed 23.5% higher.
• Netflix Inc. NFLX, -0.38% shares shed 0.4% Tuesday, derailing an earlier move toward a record close.
• Apple Inc. shares AAPL, +2.13% closed 2.1% higher for a fresh record on Tuesday, after its Worldwide Developers Conference,where the company announced new operating systems for its iPhones and computers and said it would use its own chips when building new Mac computers, ditching Intel’s in the process.
• Starbucks Corp. SBUX, +0.11% said Tuesday that it will launch its summer menu in the U.S., which will include the Impossible Breakfast Sandwich. Shares gained 0.1%.
• Greenwich LifeSciences GLSI, set terms for its planned initial public offering on Tuesday, with plans to offer 1 million share priced at $7.50 to $8.50 a pop.
• Aurora Cannabis Inc. ACB, -1.02% shares fell 1% Tuesday, despite Cantor Fitzgerald raising its price target to C$29 from C$27 for the Canadian pot company after it outlined a new set of cost cuts, including cutting its corporate staff by 25% over six months.
• Electronic Arts Inc. EA, +0.67% shares rose 0.7% Tuesday, a day after the company said in a call that results for its fiscal first-quarter results ending June were on pace to clock in much better than the company originally forecast.
• Snap Inc. SNAP, +2.02% shares rose 2% Tuesday, clinching an eighth session of gains, its longest wining streak on record.
• Albertsons Companies, Inc. has filed paperwork to go public. The grocery-store chain plans to raise up to $1.3 billion and under the ticker “ACI” on the New York Stock Exchange.
• Luckin Coffee Inc LK, -12.26% shares plunged 12.3% Tuesday, after the China-based coffee seller disclosed that it received last week an additional delisting notice from the Nasdaq for its failure to file its 2019 annual report.

How did other assets perform?

West Texas Intermediate U.S. crude CLQ20, -1.48% fell 36 cents, or 0.9%, to end at $40.37 a barrel on the New York Mercantile Exchange. In precious metals, gold futures closed near an eight-year high, with the August contact GCM20, +0.37% gaining $15.60, or 0.8%, to settle at $1,782 an ounce, the highest price for the most-active contract since Oct. 4, 2012.

The 10-year Treasury note yield TMUBMUSD10Y, 0.707% rose less than a basis point to 0.708%, while inching just 1.5 basis points higher over the past three trading sessions. Bond prices move inversely to yields.

The greenback was down 0.4% against basket of its major rivals, based on trading in the ICE U.S. Dollar Index DXY, +0.16%.

In global equities, the Stoxx Europe 600 index SXXP, -1.48% closed 1.3% higher, while the FTSE 100 index UKX, -1.88% advanced 1.2%.

In Asian markets, China’s benchmark CSI 300 index 000300, +0.41% gained 0.4%, the Japanese Nikkei NIK, -0.06% picked up 0.5% lower, Hong Kong’s Hang Seng HSI, -0.50% gained 1.6%, and South Korea’s Kospi index 180721, +1.42% inched up 0.2%.

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