U.S. stocks battled for direction on Tuesday as concerns about global growth and Covid variants kept investors nervous.
The Dow Jones Industrial Average rose 72 points, or 0.2%, after briefly falling more than 100 points at the beginning of the session. The S&P 500 was flat while the Nasdaq Composite lost 0.5%. The Dow and S&P 500 closed lower on Monday after rising earlier in the session.
The US 10-year Treasury yield remained well below 1.2% on Tuesday, reflecting some of the concerns about a slowdown in economic growth after falling to nearly 5-month lows on Monday. Oil prices continued to fall, with West Texas Intermediate futures falling below $ 70 a barrel.
The spread of the delta coronavirus variant continued to cloud the economic outlook. The seven-day average of daily coronavirus cases in the US hit 72,790 on Friday, beating its peak last summer when the nation did not have an approved Covid-19 vaccine, according to data compiled by the Centers for Disease Control and Prevention .
The stocks of companies that would be hardest hit by new health restrictions, including airlines and cruise lines, fell Tuesday morning.
On the positive side, however, the US has hit the 70% Covid vaccine milestone, according to the CDC.
“The Delta variant of the virus is now spreading rapidly in the US and a modest decline in activity cannot be ruled out,” Solita Marcelli, CIO Americas at UBS, said in a press release. “But any possible slowdown should be dampened a bit.”
Traders on the floor of the New York Stock Exchange
A mixed day for tech stocks weighed on the broader indices, with stocks on Amazon and Facebook falling. The Dow was bolstered by health stocks like Amgen and Johnson & Johnson as investors shifted to more defensive names.
Meanwhile, earnings season continues for the second quarter, with Under Armor stocks rising nearly 5% after the company beat sales and earnings estimates. However, Clorox stock fell 11% after a disappointing report.
Simon Property shares rose 2% after the mall’s owner said sales had returned to pre-pandemic levels, 80% more than a year ago. In addition, a relatively high utilization was reported.
By Friday, 88% of the S&P 500 companies had reported a positive earnings surprise for the second quarter, the highest percentage since FactSet began collecting this metric in 2008.
“Rising earnings support valuation,” said Terry Sandven, chief equity strategist at US bank Wealth Management, in a press release. “Rising revenues and profits, generally subdued inflation, relatively low interest rates, ongoing monetary and fiscal stimulus and the medical advancement of COVID-19 support our outlook for rising US stocks in the second half of 2021.”
Investors are closely monitoring progress in Washington as lawmakers work towards a bipartisan infrastructure bill that would provide $ 550 billion for U.S. infrastructure. Senate majority leader Chuck Schumer wants to get the 2,702-page bill through the Chamber before a planned one-month break from August 9th.