Stocks mixed as investors weigh downside of reopening economy and look to book gains before month end

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U.S. stocks traded mixed Tuesday afternoon, paring early-morning gains, as investors weighed the easing of some coronvirus-related economic restrictions against the potential for poor corporate earnings.

What are major indexes doing?

The Dow Jones Industrial Average DJIA, 0.46% rose 97 points, or 0.4%, to 24,230, while the S&P 500 index SPX, 0.33% advanced 5 points, or 0.2%, to 2,883. The Nasdaq Composite index COMP, -0.41% lost 45 points, or 0.5%, to 8,684.

At session highs, the Dow was up 378.46 points, or 1.6%, the S&P 500 rose 42.67, or 1.5% and the Nasdaq Composite index advanced 100.41, or 1.2%.

What’s driving the market?

Stocks gave up much of their early-morning gains as investors weighed the downside risks of several states taking actions to ease restrictions on economic activity.

Notable states announcing a relaxation of restrictions on economic activity include Ohio and Pennsylvania. Washington State, which was an initial coronavirus hot spot, will allow greater outdoor recreation, including hunting, fishing and golf starting on May 5.

“It’s obviously worries about a resurgence in infection rates,” said Chris Gaffney, president of world markets at TIAA Bank, in an interview with MarketWatch, of fading stock gains. “There also are a lot of folks out there saying the downturn is going to be much deeper and probably last longer than many had originally predicted.”

Dr. Anthony Fauci, a top White House health advisor and the nation’s top infectious disease expert, may have helped cool the risk-taking mood, Gaffney said.

Fauci warned on Tuesday about U.S. states opening prematurely, saying the U.S. could “be in for a bad fall” without effective treatments for the virus, while speaking at the Economic Club of Washington. Fauci also said he was “cautiously optimistic, about the prospects for a safe and effective vaccine for the coronavirus being known by this coming winter.

Investors also were parsing the latest round of corporate earnings and preparing for announcements from the five largest firms by market capitalization in the coming days, beginning with Google parent Alphabet IncGOOG, -2.12% after the close Tuesday. Facebook IncFB, -1.46% and Microsoft CorpMSFT, -1.49% will announce Wednesday afternoon, while Apple IncAAPL, -0.65% and Amazon.com IncAMZN, -1.73% will report Thursday.

These largest stocks in the S&P 500 index are all up 13% during the past month and make up a larger share of the S&P 500 than at any point in more than 30 years, giving them an outsized role in determining moves in the major benchmarks. A pullback in these names Tuesday could be the result of investor positioning ahead of these reports, said Randy Frederick, vice president of trading and derivatives at the Schwab Center for Financial Research.

“If you think about the market cap of those names specifically, the impact they have, and having the earnings happen around the same time, it can really move things around,” he said.

Sahak Manuelian, managing director of equity trading at Wedbush Securities said that month-end dynamics also are likely coming into play.

“You probably start to see some guys looking to take some chips off,” he told MarketWatch. “Considering everything that’s been going on since the beginning of the year, to be down 11% or 12% is not too bad.”

Investors also were eyeing volatility in the oil market, with the U.S. benchmark up 0.6%, after a 25% swoon on Monday reflecting a growing global glut and a tightening storage picture.

“The current divergence between equity markets and oil markets probably has more to do with the prospect of further stimulus measures from central banks, after the Bank of Japan extended the scope of its bond buying program yesterday, and ahead of the start of this week’s meetings of the U.S. Federal Reserve, which starts today, and the European Central Bank who meet on Thursday,” said Michael Hewson, chief market analyst at CMC Markets, in a note.

The Fed late Monday announced it would extend its program to buy bonds directly from states and cities to include more local communities.

The Fed will conclude its policy meeting Wednesday, followed by a briefing from Chairman Jerome Powell, that economists expect will be geared toward reassuring investors and the public that it has the largest economic downturn since the Great Depression under control. Since the beginning of March, the Fed has cut interest rates to zero and increased the assets on its balance sheet by more than $2 trillion since the beginning of the crisis to a record $6.6 trillion.

See:The Fed has a simple goal this week — project confidence in the face of the unknown

The global case tally for COVID-19 climbed to 3.07 million on Tuesday, according to data aggregated by Johns Hopkins University. The death toll rose to 213,273.

In economic data, the U.S. trade deficit expanded to $64.2 billion in March, from $59.9 billion in February and above the consensus estimate of $56.5 billion, according to a MarketWatch poll of economists. Home prices rose 4.2% in February nationally, according to the Case-Shiller home price index.

Consumer confidence in April plunged to 86.9 from 118.8 in March in a survey by the Conference Board, missing forecasts of 90, according to a MarketWatch poll.

Which companies are in focus?
How are other markets trading

West Texas Intermediate crude oil for June delivery CLM20, -1.10% added 9 cents, or 0.7% to trade at $12.86 per barrel, after the contract saw its second-lowest settlement on record Monday.

In precious metals, the price on an ounce of gold for June delivery GCM20, -0.14% lost $1.60, or less than 0.1% to settle at $1,722.20 an ounce.

The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, 0.606% was down 4 basis points at 0.61%.

In Asia overnight, stocks closed mostly higher, as the China CSI 300 000300, +0.69% gained 0.7%, Hong Kong’s Hang Seng index HSI, +1.21% rallied 1.2% and Japan’s Nikkei 225 NIK, -0.06% edged 0.1% lower. In Europe, shares were solidly higher Tuesday, with the Stoxx Europe 600 SXXP, +1.68% up 1.7%.

Chris Matthews contributed reporting

Originally Published on MarketWatch

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