US stocks rise as tech shares lead

Andrew Cummings
July 5, 2020

The Dow Jones Industrial Average finished the second quarter with a 17.8% gain, the largest quarterly gain since the Q1 of 1987 when it surged 21.6%.

Massive stimulus and hopes for a speedy economic rebound have returned the S&P 500 and the Dow to 7.6% and 12.6% below their record highs reached in February. Both the Dow and S&P 500 were on pace for their best quarterly performance since 1998, surging more than 16% each.

Encouraging reports on the USA economy helped nudge the market higher.

Technology, health care and financial companies powered much of the market's broad gains Friday. The S&P 500 was up 47.05 points, or 1.54 per cent, to 3,100.29.

Those gains helped put the Nasdaq Composite, recently up 0.9%, on course for a new all-time-high.

The Russell 2000 index of small company stocks picked up 20.16 points, or 1.4%, to 1,441.37.

The recovery of the USA economy, now in its sixth month of recession, could stall as new cases of COVID-19 hit record levels and several states hit hardest by the resurgence halted or reversed plans to reopen their economies. The buying accelerated after a report showed stronger-than-expected improvement in consumer confidence this month. Payroll processor ADP also revised its previously reported numbers for May, saying that private employers actually added almost 3.1 million jobs that month instead of cutting 2.8 million.

Lastly, factory orders rose 0.8% in May to record their first growth in three months, according to the Commerce Department, well and truly short of the 9.7% increase expected by economists.

In the world's third-largest economy, a quarterly Bank of Japan survey showed manufacturers' sentiment plunged to its lowest level in more than a decade, as the pandemic crushes exports and tourism. A similar survey for the 19-country eurozone showed an improvement in manufacturing in June, with the industry nearly growing again after widespread shutdowns. A recent rise in coronavirus infections - which has paused or reversed reopening plans in some states - could stall next month's employment gains.

Analysts said that while the data pointed in the right direction, it shows that an economic recovery from the pandemic will be slow. Pfizer gained 4.6% after it and German biotech company BioNTech announced encouraging, preliminary data on their COVID-19 vaccine candidate.

Markets in Asia ended the day mixed.

In bond markets, the yield on the 10-year Treasury note fell to 0.674% from Wednesday's 0.682%. It tends to move with investors' expectations for the economy and inflation. The Stoxx Europe 600 Index edged up 0.1%, Germany's DAX 30 increased 0.6%, while France's CAC 40 declined 0.2% and the U.K.'s FTSE 100 was down 0.9%.

And the United States is still losing jobs, the Labor Department said in a separate report showing 1.43 million people filing initial claims for unemployment benefits last week, only slightly less than the prior week. Brent crude oil for September delivery rose 76 cents to $42.03 a barrel.

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