United States stocks end up Tuesday; indices report robust quarterly gains

Daniel Fowler
July 4, 2020

The recovery of the U.S. 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. That has dimmed some of the optimism for a relatively quick economic turnaround, especially for travel-related sectors like cruise lines.

"(But) these numbers don't take into consideration a possible second wave, which is what has markets nervous right now".

At the close, the Dow Jones Industrial Average was up 0.36% at 25,827.36, while the S&P 500 was 0.45% firmer at 3,130.01 and the Nasdaq Composite saw out the session 0.52% stronger at 10,207.63.

The Nasdaq composite added 116.93 points, or 1.2%, to 9,874.15. The Russell 2000 index of small company stocks also rose, gaining 0.3% to 1,431.86. Shares also rose in Taiwan and Southeast Asia.

The indexes were up even more at the start of the day's trading, after the US government said employers added 4.8 million jobs to their payrolls in June for the second-straight month of growth.

The rise came after the economy added a record 4.8 million jobs last month, sending the unemployment rate to 11.1 percent, down from 13.3 percent in May and a peak of 14.7 percent in April.

Even more, much of the data from Thursday's jobs report was collected while local economic re-openings were well under way. But they say it's nevertheless clear that the job market is improving after collapsing in the spring amid widescale shutdowns.

Such hopes have lifted the S&P 500 to within roughly 7% of the record set in February, after an earlier almost 34% drop when recession worries peaked. The US drug maker Pfizer Inc said a COVID-19 vaccine being developed with German biotech firm BioNTech showed promise and was found to be well-tolerated in early-stage human trials.

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About 33% of lost jobs, or 7.5 million out of 22.2 million, have been clawed back following losses earlier in the month, but some questioned whether the strength can continue as infections continue to mount.

Investors said they would be looking to see if rising employment numbers result in an uptick in consumer spending, which accounts for roughly two-third of USA economic activity. Such concerns have held the market in check since early June following a months-long rocket ride. The number of workers filing for unemployment benefits last week dipped by less than economists expected, for example.

The number of applications for jobless benefits filed every week has come down from a peak of almost 7 million in late March, but has stabilized near a historically high 1.5 million, an indication that companies are continuing to cut jobs.

Energy was among the biggest gainers despite cutting gains as investor worries about demand abated somewhat. Vulcan Materials led the pack, adding 4.2 percent. In South Korea, the Kospi gained 0.6% to 2,148.24, and Australia's S&P/ASX 200 rose 0.6% to 6,067.30.

They benefited from hopes that a recovering economy will restore some of the demand for oil that vanished in the spring as people stopped driving, airplanes were left parked in the desert and factories went idle.

In bond markets, the yield on the 10-year Treasury note fell to 0.672% from Wednesday's 0.682%. Brent crude, the global standard, added $1.11 to close at $43.14 per barrel.

Bond investors were showing less enthusiasm, though. It tends to move with investors' expectations for the economy and inflation.

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