U.S. stocks struggle for direction but indexes on track for weekly gains

This post was originally published on this site

U.S. stocks opened flat to slightly lower Friday, but major benchmarks remained on track for weekly gains after the S&P 500 index and Nasdaq Composite each logged a record finish in the previous session.

What are major benchmarks doing?
  • The Dow Jones Industrial Average DJIA, -0.17% traded on either side of unchanged, up 8.51 points at 31,439.21.
  • The S&P 500 SPX, -0.03% was down 5.10 points, or 0.1%, at 3,911.28.
  • The Nasdaq Composite COMP, -0.16% shed 70.15 points, or 0.5%, to trade at 13,955.63.

The Dow fell 7.10 points, or less than 0.1%, on Thursday, pulling back from the previous session’s record close, while the S&P 500 and Nasdaq Composite rose slightly, ending at records after two days of small losses.

What’s driving the market?

Stocks were on track for weekly gains, but have seen choppy trading. Support remains tied to expectations Congress will approve another round of aid spending closer to President Joe Biden’s $1.9 trillion proposal, as well as optimism over the continued rollout of COVID-19 vaccines and the falling pace of new cases.  

A House committee on Thursday approved half of Biden’s relief plan, advancing $1,400 payments to millions of Americans alongside other measures opposed by Republican lawmakers.

The U.S. is on pace to exceed Biden’s goal of administering 100 million vaccine doses in his first 100 days in office, with more than 26 million shots delivered in the past three weeks. Roughly 34.7 million out of some 331 million Americans have received at least their first dose of vaccine, according to the CDC. In the past week, an average of 1.62 million doses a day were administered.

Biden on Thursday said the U.S. will have enough COVID-19 vaccine by the end of the summer to inoculate 300 million Americans.

“While risks remain, the data says we are moving beyond the third wave of the pandemic and the medical risks may be dropping. Similarly, while the economic damage has been real, with economies reopening and the federal stimulus supporting the most vulnerable parts of the economy, we are moving past the worst of it,” said Brad McMillan, chief economist at Commonwealth Financial Network, in a note.

“The most likely case for the next couple of weeks appears to be continued improvement of the medical news, as well as economic improvement as reopenings take effect,” he said. “Markets will likely keep bouncing around on new developments, so expect more volatility in the short term.”

Corporate earnings have also been a positive factor, analysts said. As of Thursday, fourth-quarter earnings per share surpassed prior year levels and four-quarter rolling EPS are now expected to hit records in the second quarter, said Jonathan Golub, chief U.S. equity strategist at Credit Suisse, in a note.

“The earnings recovery has been substantially more robust than we could have imagined when the pandemic first took hold,” he said.

Activity could be subdued Friday. Much of Asia was closed due to holidays, while U.S. investors were preparing for a three-day weekend. U.S. markets will be closed Monday for Presidents Day.

The economic calendar is light on Friday. A preliminary reading of February consumer sentiment is due at 10 a.m. Eastern.

Which companies are in focus?
  • Shares of Walt Disney Co. DIS, -1.75% rose 1.1% after the entertainment juggernaut late Thursday delivered a surprise fourth-quarter profit, which came as a surge in Disney+ subscriptions led a revenue rebound from the previous quarter.
  • S&P Global Ratings said Thursday afternoon it had downgraded Chevron Corp. CVX, -0.00 bonds to AA-, from AA, with a stable outlook. Shares of the oil giant were off 0.6%.
  • Shares of Cloudflare Inc. NET, -6.34% were down 5.4% after the cybersecurity company’s results and outlook topped Wall Street expectations on Thursday. The shares have surged nearly 400% over the last 12 months.
  • Expedia Group Inc. EXPE, -1.65% late Thursday reported results that showed the continued effects of the COVID-19 pandemic on the travel industry, with gross bookings and revenue each plunging 67% in the fourth quarter. Shares were down 1%.
  • Shares of Coherent Inc. soared 12%, after The Wall Street Journal reported that II-VI Inc. IIVI, -3.21%  plans to make a roughly $6.5 billion bid for the laser technology company. Shares of IIVI fell more than 7%.
What are other markets doing?
  • The yield on the 10-year Treasury note TMUBMUSD10Y, 1.189% was up 1.6 basis points at 1.177%. Yields and bond prices move in opposite directions.
  • The ICE U.S. Dollar Index DXY, +0.24%, a measure of the currency against a basket of six major rivals, was up 0.3%.
  • Oil futures were trading near unchanged, with the U.S. benchmark CL.1, +0.43% down 4 cents at $58.20 a barrel. Gold futures GC00, -0.51% were on the defensive, down 0.5% at $1,817.80 an ounce.
  • The pan-European Stoxx 600 index SXXP, +0.48% and London’s FTSE 100 stock index UKX, +0.60% were both up 0.2%.
  • Markets in Hong Kong and Shanghai were closed for the Lunar New Year holiday. Japan’s Nikkei 225 index NIK, -0.14% shed 0.1%.

Related Posts