Stock Market News for Aug 5, 2020

Zacks Equity Research
·4-min read

U.S. stock market rally continued on Tuesday as investors expect the second round of fiscal stimulus by the government in the first half of this month. Better-than-expected economic data also strengthened investors' confidence. All three major stock indexes closed in green.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) finished in positive note for three successive days after gaining 0.6% or 164.07 points to close at 26,828.47. Notably, 22 components of the 30-stock blue-chip index ended in the green while 8 finished in red.

The tech-laden Nasdaq Composite ended in positive territory for five consecutive days to close at 10,941.17, rising 0.4%. This marked a new closing high for the tech-heavy index while in intraday trading, Nasdaq Composite attained a fresh all-time high at 10,941.91. This reflected the 30th all-time highs achieved by the index so far this year.

Meanwhile, the S&P 500 advanced 0.4% to end at 3,306.51. This marked the three-day winning streak and the first closing of the broad-market index above 3,300 since Feb 21. The Energy Select Sector SPDR (XLE), the Real Estate Select Sector SPDR (XLRE) and the Materials Select Sector SPDR (XLB) climbed 2..4%, 1.5% and 1.4%, respectively. Notably, nine out of eleven sectors of the benchmark index closed in positive territory while two in negative territory.

Oil giants like Exxon Mobil Corp. XOM and Chevron Corp. CVX surged 2.9% and 2%, respectively. Both stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The fear-gauge CBOE Volatility Index (VIX) was down 2.1% to 23.76. A total of 9.7 billion shares were traded on Tuesday, lower than the last 20-session average of 10.4 billion. Advancers outnumbered decliners on the NYSE by a 1.98-to-1 ratio. On Nasdaq, a 1.55-to-1 ratio favored advancing issues.

Expectations on Second Round of Fiscal Stimulus

Market participants appear to be betting on progress toward a fresh fiscal stimulus. However, a meeting between House Speaker Nancy Pelosi, Treasury Secretary Steve Mnuchin and White House chief of staff Mark Meadows failed to deliver any conclusion.

The Democrats want the previous $600 per week unemployment benefit to continue while the Republicans want it to reduce to $200 per week. However, Mnuchin said the two sides have agreed for direct cash payments of $1,200 to most Americans despite disagreements.

Economic Data

The Department of Commerce reported that factory orders climbed 6.2% in June after jumping 7.7% in May. The consensus estimate was for an increase of 4.8%. However, factory orders declined 10.1% in July year over year. Shipments of core capital goods (excluding aircraft) increased 3.3% in June. This metric is used to calculate business equipment spending in the GDP report.

Transportation equipment orders surged 20.2% after skyrocketing 78.8% in the prior month. Orders for motor vehicles and parts jumped 86.2%. Machinery orders increased 3.0% and orders for electrical equipment, appliances and components rose 1.9%.

The Department of Commerce reported sales of domestic vehicle grew to 11.2 million in July from 9.6 million in June. Total vehicle sales rose 14.5 million in July from 13.1 million in June. The consensus estimate was 14 million.

As per CoreLogic, home prices increased by 4.9% annually in June compared with the 4.1% annual rise in May. Prices hiked 1% sequentially marking the fastest monthly gain since 2013.

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