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Business

Dow, S&P 500 fall on fears over surging virus cases

(Reuters) – The S&P 500 and Dow dropped on Thursday as investors worried about another round of business shutdowns to contain a surge in coronavirus cases and they began to shift their focus to earnings.

The United States saw more than 60,000 new COVID-19 infections on Wednesday, setting a single-day global record while Florida and Texas reported a record one-day increase in deaths.

Walgreens Boots Alliance Inc (WBA.O) tumbled 8.2% after it reported a quarterly loss compared with a profit a year earlier, hurt by non-cash impairment charges of $2 billion as COVID-19 disrupted business at its Boots UK division.

Investors also are beginning to turn their focus to second-quarter earnings. S&P 500 companies are expected to post the biggest quarterly decline in earnings since the financial crisis, based on IBES data from Refinitiv.

“I expect a lot of confusing numbers and guidance. COVID is certainly not behind us in any way shape or form, so maybe the V gets elongated some,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

The Nasdaq was higher and hit another record high, however, helped by gains in Amazon.com (AMZN.O), Microsoft Corp (MSFT.O) and Apple Inc (AAPL.O).

The Dow Jones Industrial Average .DJI fell 289.33 points, or 1.11%, to 25,777.95, the S&P 500 .SPX lost 11.05 points, or 0.35%, to 3,158.89 and the Nasdaq Composite .IXIC added 68.25 points, or 0.65%, to 10,560.75.

U.S. stocks had opened higher after data showed the number of Americans filing for jobless benefits dropped to a near four-month low last week, but a record 32.9 million people were collecting unemployment checks in the third week of June.

A batch of upbeat economic data including the record pace of job additions in June has underscored that the stimulus-fueled domestic economy was on the path to recovery.

The benchmark S&P 500 has risen more than 40% from its March closing lows and is now about 7.8% below its February record high. The Nasdaq notched a record close in the prior session.

In a bullish signal for near-term momentum, the benchmark S&P 500’s chart formed a “golden cross” pattern, in which its 50-day moving average vaulted above the 200-day moving average.

Cisco Systems Inc (CSCO.O) rose as Morgan Stanley upgraded its rating on the network gear maker’s stock to “overweight”.

Declining issues outnumbered advancing ones on the NYSE by a 2.63-to-1 ratio; on Nasdaq, a 2.09-to-1 ratio favored decliners.

The S&P 500 posted 32 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 114 new highs and 29 new lows.

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Business

Wall Street slips as surging virus cases dent recovery hopes

(Reuters) – U.S. stock indexes fell in choppy trading on Thursday as fears of another lockdown to contain a surge in coronavirus cases overshadowed data pointing to a declining trend in weekly jobless claims.

The Labor Department’s most timely data on the economy showed 1.31 million Americans filed for state unemployment benefits in the latest week, down from 1.43 million in the previous week.

However, the labor market remains fragile as the United States reported more than 60,000 new COVID-19 infections on Wednesday, setting a single-day global record.

“We are reaching levels of unemployment that are likely to persist until a more true reopening can occur, either with a vaccine, novel treatment, or time,” said Jamie Cox, managing partner for Harris Financial Group in Richmond, Virginia.

A batch of upbeat economic data including the record pace of job additions in June has underscored that the stimulus-fueled domestic economy was on the path to recovery.

The benchmark S&P 500 has risen more than 40% from its March lows and is now about 7% below its February record high.

The three main indexes charged ahead in the final hour of trading on Wednesday, with Nasdaq logging its fourth record closing high this month, powered by technology stocks.

At 10:54 a.m. ET, the Dow Jones Industrial Average .DJI was down 346.80 points, or 1.33%, at 25,720.48, the S&P 500 .SPX was down 27.98 points, or 0.88%, at 3,141.96, and the Nasdaq Composite .IXIC was down 26.10 points, or 0.25%, at 10,466.40.

All the 11 major S&P sectors were trading lower, led by financials .SPSY and industrials .SPLRCI.

Cisco Systems Inc (CSCO.O) rose 2.3% as Morgan Stanley upgraded its rating on the network gear maker’s stock to “overweight”.

Walgreens Boots Alliance Inc (WBA.O) fell 9.1% after it reported a quarterly loss compared with a profit a year earlier, hurt by non-cash impairment charges of $2 billion as COVID-19 disrupted business at its Boots UK division.

The second-quarter earnings season is expected to begin in earnest next week. Analysts expect profits for S&P 500 companies to plunge about 44%, the steepest drop since the 2008 financial crisis, according to IBES Refinitiv data.

Declining issues outnumbered advancers for a 3.18-to-1 ratio on the NYSE and a 2.88-to-1 ratio on the Nasdaq.

The S&P index recorded 30 new 52-week highs and one new low, while the Nasdaq recorded 102 new highs and 14 new lows.

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World News

Senior China diplomat urges "positive energy" in ties with United States

BEIJING (Reuters) – Senior Chinese diplomat Wang Yi said on Thursday that China and U.S. relations face the most serious challenges since diplomatic ties were established in 1979 but the two countries can return to the right track.

China and the United States should jointly explore ways for peaceful coexistence and release more “positive energy,” State Councilor Wang, who is also foreign minister, said in a speech posted on his ministry’s website.

Washington and Beijing have been at loggerheads over the handling of the coronavirus outbreak, China’s actions in the former British colony of Hong Kong, a long-running trade dispute, and frictions over Taiwan and the South China Sea.

“Current U.S. policy towards China is based on strategic misjudgments which lack a factual basis, and is full of emotional outbursts and McCarthyist prejudice,” he said, referring to an anti-communist witch hunt inspired by a U.S. senator in the 1950s.

On Wednesday, U.S. Secretary of State Mike Pompeo said the world should not permit China’s “bullying” to take place, highlighting the country’s territorial disputes with India, Vietnam, and Japan.

The two countries should not seek to change each other, said Wang. “China cannot and will not become another America,” he said, adding that a socialist system was suited to China and the choice of its people.

Wang said he hoped the United States would build a more objective understanding of China and formulate a more rational and pragmatic China policy.

More dialogue, separating out different issues and setting to one side the areas of greatest disagreement, and cooperation in fighting against the coronavirus pandemic would help put bilateral relations on the right track, said Wang.

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Politics

Mexican leader praises Trump despite past tariff threats, insults

WASHINGTON (Reuters) – Mexican President Andres Manuel Lopez Obrador lavished praise on President Donald Trump at their first meeting on Wednesday, saying the U.S. leader treated Mexico with respect despite his history of threatening tariffs and insulting Mexicans.

The leftist Mexican leader made his first foreign trip as president to the White House, where he and Trump accentuated the positive in their public remarks while largely glossing over their differences on business, illegal drugs and migration.

“What I most appreciate is that you have never tried to impose anything on us that violates or damages our sovereignty,” Lopez Obrador said in Spanish, turning to look at Trump as the two spoke in the White House Rose Garden before signing a joint declaration.

“You have never attempted to treat us like a colony,” he added. “That’s why I am here to say to the people of the United States that your president has treated us with kindness and respect.”

The White House said all members of the Mexican delegation, including Lopez Obrador, were tested for the coronavirus before they met Trump, as was the case when Poland’s president visited on June 24.

Mindful of the coronavirus pandemic, which is still surging in Mexico and the United States, the two leaders did not shake hands when Trump greeted Lopez Obrador on his arrival. Neither wore face masks.

Trump said a joint declaration that the two men signed would commit both countries “to a shared future of prosperity security and harmony.”

Neither man raised their differences in detail in public.

Related Coverage

  • Most Mexicans say country should be closer to U.S., poll shows

Lopez Obrador brushed off criticism at home to meet Trump, a Republican widely disliked in Mexico because of his incendiary remarks about its people.

Trump described Mexican immigrants as rapists and drug runners during his 2015-16 presidential election campaign and vowed to make Mexico pay for his planned border wall.

In May 2019, Trump threatened tariffs against Mexico to force it to reduce the number of illegal immigrants entering the United States. He only backed off after Lopez Obrador agreed to deploy security forces and other steps to stem the flow of Central American migrants.

The meeting on Wednesday was pitched to mark the July 1 start of United States-Mexico-Canada Agreement (USMCA), which replaced the North American Free Trade Agreement that Trump long lambasted.

But the two-day gathering was scaled back to a single day after Canadian Prime Minister Justin Trudeau opted out amid new U.S. threats of tariffs on Canadian goods.

Trump said he would speak to Trudeau later and the Canadian would visit at an appropriate time.

Two people familiar with preparations for the meeting said the private sector was eager for Trump to raise concerns about Lopez Obrador’s attempts to renegotiate billions of dollars worth of contracts in energy infrastructure.

Lopez Obrador’s government is slowly rolling back a 2013-14 opening of the energy industry in favor of a state-led model, and has called a number of major contracts into question.

A senior U.S. official this week said Mexico’s government had pledged to uphold those contracts.

Lopez Obrador was joined by a delegation of business officials, including Mexico’s richest man, telecoms magnate Carlos Slim, who are to dine on Wednesday evening with Trump and American business executives at the White House.

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Business

Nasdaq ends at record high as Wall Street rises with tech shares

(Reuters) – U.S stocks rose on Wednesday and the Nasdaq hit a record closing high, supported by technology shares as early signs of an economic rebound offset concern about further lockdowns due to a jump in coronavirus cases across the country.

Apple Inc (AAPL.O) and Microsoft Corp (MSFT.O) provided the biggest boosts to the Dow and S&P 500, with the S&P 500 technology index .SPLRCT up 1.6% and leading sector gains. The Nasdaq outpaced the other two major indexes, ending 1.4% higher, led by Amazon.com (AMZN.O), its fourth record closing high this month.

The number of confirmed U.S. coronavirus cases surpassed 3 million, affecting nearly one of every 100 Americans. California, Hawaii, Idaho, Missouri, Montana, Oklahoma and Texas broke their previous daily record highs for new infections.

Investors have been weighing a string of upbeat economic data including record job additions and a rebound in the service sector in June, against the surge in U.S. coronavirus cases recently, but the S&P 500 is still up more than 40% from its March closing low.

“The market continues to ignore the potential consequences of these spikes in new coronavirus cases,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

“It’s overbought,” he said. “While I don’t expect this market to crash… I think investors at this juncture are playing with fire,” he said, noting the rise in safe-haven gold prices. XAU= [GOL/]

Adding to the optimistic tone late in the session, St. Louis Federal Reserve Bank President James Bullard told CNBC in an interview that U.S. unemployment will likely decline to below 8% “maybe even 7%” by the end of the year.

The Dow Jones Industrial Average .DJI rose 177.1 points, or 0.68%, to 26,067.28, the S&P 500 .SPX gained 24.62 points, or 0.78%, to 3,169.94 and the Nasdaq Composite .IXIC added 148.61 points, or 1.44%, to 10,492.50.

Markets also appeared to be in a wait-and-watch mode before the beginning of the second-quarter earnings season, which kicks off next week with reports from the big Wall Street banks.

Quarterly earnings for S&P 500 companies are expected to decline nearly 44% year-on-year, the steepest drop since the 2008 financial crisis, according to IBES data from Refinitiv.

Biogen Inc (BIIB.O) jumped 4.4% after the company said it submitted the marketing application for its experimental Alzheimer’s disease therapy, aducanumab.

Allstate Corp (ALL.N) shares fell 4.8% as the U.S. insurer said it would buy National General Holdings Corp (NGHC.O) for about $4 billion, scaling up its auto insurance business. National General shares surged 65.8%.

Advancing issues outnumbered declining ones on the NYSE by a 1.48-to-1 ratio; on Nasdaq, a 1.34-to-1 ratio favored advancers.

The S&P 500 posted 20 new 52-week highs and no new lows; the Nasdaq Composite recorded 99 new highs and 18 new lows.

Volume on U.S. exchanges was 10.40 billion shares, compared with the 12.4 billion average for the full session over the last 20 trading days.

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Politics

Mexican president meets Trump for first time with business on the menu

WASHINGTON (Reuters) – Mexican President Andres Manuel Lopez Obrador met his U.S. counterpart Donald Trump for the first time on Wednesday, in a potentially tricky encounter that may broach tensions over Mexico’s treatment of U.S. energy sector investors.

The leftist leader has brushed off criticism at home to push ahead with plans to meet Trump, a Republican widely disliked in Mexico because of his incendiary remarks about its people.

The meeting ostensibly aims to celebrate the start of the United States-Mexico-Canada Agreement (USMCA) trade deal, but disputes over energy sector contracts in Mexico could arise as the two men got together in the afternoon.

Mindful of the coronavirus pandemic, which is still surging in Mexico and the United States, the two did not shake hands as they met outside the White House. Neither wore face masks.

The USMCA was crafted in long negotiations headed by U.S. Trade Representative (USTR) Robert Lighthizer.

Two people familiar with preparations for the meeting said the private sector was eager for Trump to raise concerns about Lopez Obrador’s attempts to renegotiate billions of dollars worth of contracts in energy infrastructure.

One said the issue had been put high on Lighthizer’s agenda for the meeting, though despite promptings from his own ambassador in Mexico, Trump has made little of it so far. Lighthizer’s office did not reply to a request for comment.

Lopez Obrador’s government is slowly rolling back a 2013-14 opening of the energy industry in favor of a state-led model, and has called a number of major contracts into question.

A senior U.S. official said on Monday evening Mexico’s government had pledged to uphold those contracts.

“So, we are certainly hoping that they will keep their word,” the official told reporters.

Mexican-U.S. cooperation over Trump’s immigration policies could feature prominently, although one source familiar with the matter said the talks aimed to prioritize business.

The summit was pitched to mark the start of USMCA, which replaced the North American Free Trade Agreement that Trump long lambasted. But the two-day gathering was scaled back to a single day after Canadian Prime Minister Justin Trudeau opted out amid new U.S. threats of tariffs on Canadian goods.

Related Coverage

  • Most Mexicans say country should be closer to U.S., poll shows

Lopez Obrador is being joined by a delegation of business officials, including Mexico’s richest man, telecoms magnate Carlos Slim. They will dine on Wednesday evening with Trump and American business executives at the White House.

Lopez Obrador’s critics and some U.S. Democrats say Trump wants to use the meeting to drum up support among Hispanic voters ahead of the Nov. 3 presidential election.

Opinion polls show Hispanic voters favor Trump’s Democratic rival, Joe Biden. Lopez Obrador will not meet Biden on the trip.

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Business

Wall Street inches up with tech shares, though jump in virus cases a concern

(Reuters) – U.S stocks were slightly higher in choppy trading on Wednesday, supported by technology shares as early signs of an economic rebound offset concern about further lockdowns due to a jump in coronavirus cases across the country.

Apple Inc (AAPL.O) and Microsoft Corp (MSFT.O) provided the biggest boost to all three indexes. The technology index .SPLRCT rose 0.9%.

The number of confirmed U.S. cases surpassed 3 million, affecting nearly one of every 100 Americans. California, Hawaii, Idaho, Missouri, Montana, Oklahoma and Texas broke their previous daily record highs for new infections.

Investors have been weighing a string of upbeat economic data including record job additions and a rebound in the service sector in June, against the surge in U.S. coronavirus cases recently, but the S&P 500 is still up about 40% from its March closing low.

There still seems to be a focus on the reopenings rather than the increase in cases, said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

“But there are warning signs out there… While I don’t expect this market to crash, it’s overbought, and I think investors at this juncture are playing with fire,” he said, noting the rise in safe-haven gold prices.

Markets also appeared to be in a wait-and-watch mode before the beginning of the second-quarter earnings season, which kicks off next week with reports from the big Wall Street banks.

Quarterly earnings for S&P 500 companies are expected to decline nearly 44% year-on-year, the steepest drop since the 2008 financial crisis, according to IBES data from Refinitiv.

The Dow Jones Industrial Average .DJI rose 22.94 points, or 0.09%, to 25,913.12, the S&P 500 .SPX gained 6.11 points, or 0.19%, to 3,151.43 and the Nasdaq Composite .IXIC added 82.88 points, or 0.8%, to 10,426.77.

Biogen Inc (BIIB.O) jumped 4.2% after the company said it submitted the marketing application for its experimental Alzheimer’s disease therapy, aducanumab.

Allstate Corp (ALL.N) shares slipped as the U.S. insurer said it would buy National General Holdings Corp (NGHC.O) for about $4 billion, scaling up its auto insurance business. National General shares surged 65.1%.

Advancing issues outnumbered declining ones on the NYSE by a 1.06-to-1 ratio; on Nasdaq, a 1.04-to-1 ratio favored decliners.

The S&P 500 posted 17 new 52-week highs and no new lows; the Nasdaq Composite recorded 92 new highs and 18 new lows.

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Business

Wall Street rises on rebound hopes despite jump in virus cases

(Reuters) – Technology shares boosted Wall Street’s main indexes on Wednesday as early signs of an economic rebound offset fears of another lockdown due to a jump in coronavirus cases across the country.

Safe-haven gold rose more than 1% as the number of confirmed U.S. cases surpassed 3 million, affecting nearly one of every 100 Americans. California, Hawaii, Idaho, Missouri, Montana, Oklahoma and Texas broke their previous daily record highs for new infections.

“We expect the tug of war between better economic data and concerns over rising COVID-19 cases to continue through the month unless we get better daily virus numbers, and/or news on a vaccine,” said Art Hogan, chief market strategist at National Securities in New York.

The Nasdaq notched an intraday record high on Tuesday but all the three main stock indexes finished lower as investors booked profits following a strong run on the back of upbeat economic data over the last few days.

Bolstering hopes of a post-pandemic rebound, analysts said any setback in business activity due to the recent surge in infections would be short term, leaving their long-term forecasts for economic growth unchanged.

Markets also appeared to be in a wait-and-watch mode before the beginning of the second-quarter earnings season, which kicks off next week with reports from the big Wall Street banks.

Quarterly earnings for S&P 500 companies are expected to plunge about 43% year-on-year, according to IBES Refinitiv data.

“Wall Street is looking ahead to 2021 earnings and pretty much ignoring 2020,” said Sam Stovall, chief investment strategist at CFRA Research in New York.

Technology sectors .SPLRCT firmed 1.2%, the most among the 11 major S&P sectors.

At 10:52 a.m. ET, the Dow Jones Industrial Average .DJI was up 121.80 points, or 0.47%, at 26,011.98, the S&P 500 .SPX was up 18.26 points, or 0.58%, at 3,163.58. The Nasdaq Composite .IXIC was up 114.52 points, or 1.11%, at 10,458.41.

Biogen Inc (BIIB.O) jumped 5% after the company said it submitted the marketing application for its experimental Alzheimer’s disease therapy, aducanumab.

Allstate Corp (ALL.N) slipped 3.2% as the U.S. insurer said it would buy National General Holdings Corp (NGHC.O) for about $4 billion, scaling up its auto insurance business. National General shares surged 64.6%.

Levi Strauss & Co (LEVI.N) fell 6.4% as the denim apparel maker cautioned its business would be hit in the second half of the year, even as its sales have been improving at its reopened stores.

Advancing issues outnumbered decliners for a 1.46-to-1 ratio on the NYSE and a 1.40-to-1 ratio on the Nasdaq.

The S&P index recorded 16 new 52-week highs and no new low, while the Nasdaq recorded 78 new highs and 13 new lows.

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World News

Ireland may cut tax on business in stimulus plan: minister

DUBLIN (Reuters) – Ireland is considering reductions in business tax as part of a “radical and far reaching” multi-billion euro stimulus plan set to be announced in the week of July 21, Business Minister Leo Varadkar said on Wednesday.

Ireland’s tourism and hospitality sector has called for a cut in the rate of Value Added Tax (VAT). The government temporarily reduced the rate to 9% from 13.5% in 2011 to help the industry recover from the last economic crisis.

“The kind of things that we are considering are restart grants to help businesses that are reopening or have reopened, reductions in business tax and commercial rates, access to low-cost loans,” Varadkar told a news conference.

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Business

Wall Street slips after strong recent rally, as COVID cases mount

(Reuters) – U.S. stocks eased on Tuesday as investors took profits a day after the S&P 500 logged its longest streak of gains this year and as new U.S. coronavirus cases rose further.

Large parts of the United States reported tens of thousands of new coronavirus infections. New York expanded its travel quarantine for visitors from three more states, while Florida’s greater Miami area rolled back its reopening.

The Nasdaq was outperforming the other two main indexes, hovering between gains and losses but claiming another record high. Boosting the Nasdaq were shares of technology heavyweights Microsoft Corp (MSFT.O) and Apple Inc (AAPL.O).

“I’m looking at this simply as a digestion day where investors are sort of regrouping after yesterday’s nice, upward move, as well as the advance that we saw last week,” said Sam Stovall, chief investment strategist at CFRA Research in New York.

He noted that the forward price-to-earnings ratio on the market is now at a nearly 50% premium to the 20-year average, based on his data.

The S&P 500 and Nasdaq have risen in the past five sessions despite an alarming rise in coronavirus cases in the United States as a slew of upbeat data for June bolstered views that an economic recovery is underway.

The Dow Jones Industrial Average .DJI fell 242.32 points, or 0.92%, to 26,044.71, the S&P 500 .SPX lost 16.99 points, or 0.53%, to 3,162.73 and the Nasdaq Composite .IXIC dropped 22.63 points, or 0.22%, to 10,411.03.

The S&P 500 e-minis EScv1 triggered a “golden cross” pattern on Tuesday, when the 50-day moving average crossed above the 200-day moving average, which could portend more gains for stocks in the short term.

An index of bank stocks .SPXBK dropped 3.0%. Travel-related stocks, which were among the hardest hit during lockdowns, also fell. The S&P 1500 airlines index .SPLCOMAIR shed 4.5%.

The benchmark S&P 500 and blue-chip Dow Industrials .DJI have risen about 45% from their March lows and are now about 6% and 11% from their record levels hit in February. The Nasdaq .IXIC reclaimed its record high last month.

Walmart Inc (WMT.N) jumped 6.2% after a report that the retailer is close to launching its membership program, a direct competitor for Amazon.com’s (AMZN.O) Prime service. Amazon shares slipped 1.3%.

Novavax Inc (NVAX.O) jumped 29% as the U.S. government awarded $1.6 billion to the drugmaker to cover testing, commercialization and manufacturing of a potential coronavirus vaccine in the country.

Declining issues outnumbered advancing ones on the NYSE by a 2.26-to-1 ratio; on Nasdaq, a 1.97-to-1 ratio favored decliners.

The S&P 500 posted 32 new 52-week highs and no new lows; the Nasdaq Composite recorded 82 new highs and 14 new lows.

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