Wall Street struggles for direction after strong rally as virus cases surge

By Reuters Last updated Jul 7, 2020

FILE PHOTO: Traders wear masks as they work on the floor of the New York Stock Exchange as the outbreak of the coronavirus disease (COVID-19) continues in the Manhattan borough of New York, U.S., May 28, 2020. REUTERS/Lucas Jackson

By C Nivedita and Medha Singh

(Reuters) – The S&P 500 was little changed on Tuesday a day after the benchmark index logged its longest streak of gains this year, as investors weighed expectations of an economic recovery against risks from a sharp jump in new coronavirus cases nationwide.

The tech-heavy Nasdaq, on the other hand, claimed another record level, boosted by shares of Microsoft Corp (O:MSFT) and Apple Inc (O:AAPL) while the Dow Industrials (DJI) dropped 0.7% weighed down by Goldman Sachs (N:GS) and Boeing Co (N:BA).

Florida’s greater Miami area became the latest U.S. coronavirus hot spot to roll back its reopening, while Texas registered an all-time high in the number of people hospitalized at any one moment with COVID-19 for an eighth straight day.

Bank stocks, whose performance is linked to the outlook for the economy, dropped 2.5%. Travel-related stocks, which were among the hardest hit during lockdowns, also fell. The S&P 1500 airlines index shed 3.5%.

“There’s some signs of improvement in economic activity and there’s concerns about rising cases in particular states. And all of that had the market kind of churning but not really find true direction,” said Brian Levitt, global market strategist, Invesco (NYSE:IVZ) in New York City.

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 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.

The S&P 500 e-minis 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.

At 11:09 a.m. ET, the Dow Jones Industrial Average (DJI) was down 184.71 points, or 0.70%, at 26,102.32, the S&P 500 (SPX) was down 1.38 points, or 0.04%, at 3,178.34. The Nasdaq Composite (IXIC) was up 62.80 points, or 0.60%, at 10,496.45.

“There is an incredible bifurcation in the market between companies that are technologically adaptive in able to thrive in a virtual economy and those that still relying on the physical economy, so you’re seeing record split between the Nasdaq and the Dow, for instance,” said Ryan Giannotto, director of research at GraniteShares ETFs in New York.

Gains for technology (SPLRCT) and communications services (SPLRCS) shares capped declines on the S&P 500.

Novavax Inc (O:NVAX) jumped 28.9% 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 United States.

Royal Caribbean Group (N:RCL) and Norwegian Cruise Line Holdings Ltd (N:NCLH) dropped 2.6% and 3% each, even as they announced a joint task force to help develop safety standards for restarting their businesses.

Declining issues outnumbered advancers for a 2.27-to-1 ratio on the NYSE and for a 1.72-to-1 ratio on the Nasdaq.

The S&P index recorded 24 new 52-week highs and no new low, while the Nasdaq recorded 65 new highs and 11 new lows.