The S&P 500 kicked off the month of August with more gains as U.S. investors anticipate another economic stimulus package from the federal government.
Democrats and Republicans in Washington, D.C., reportedly made progress on negotiating a second major economic relief package, although lawmakers failed to reach a deal by week’s end. White House chief of staff Mark Meadows said Wednesday that if Congress can’t reach a compromise on a coronavirus stimulus deal, President Donald Trump is prepared to step in with an executive order.
Investors also got some updates on the coronavirus vaccine and treatment fronts last week. The Food and Drug Administration approved Abiomed’s Impella heart pump for use in treating severe coronavirus cases, and the National Institute of Health announced it is beginning two new trials of Eli Lilly’s LY-CoV555 experimental antibody drug in treating patients with COVID-19.
Microsoft confirmed it’s in talks to acquire popular social media platform TikTok from Chinese parent company ByteDance. The buyout talks came after President Trump threatened to ban the app in the U.S. due to national security concerns, and Treasury Secretary Steven Mnuchin is reportedly closely involved in the negotiations. Chinese government media referred to the TikTok buyout talks as “theft” and called the U.S. a “rogue country” for its involvement in the process.
On Thursday, shares of Detroit’s Rocket Companies, the parent company of mortgage lender Quicken Loans, soared 19% on its first day of trading following the company’s $1.8 billion initial public offering.
Jobs numbers better than expected
Friday’s jobs report also offered investors a clearer picture of how the labor market is reacting to the gradual reopening of the economy.
About 1.76 million non-farm jobs were added in July, according to the Bureau of Labor Statistics, while unemployment fell to 10.2%. Both numbers were better than what economists were hoping for.
“The gains were consistent with what was allowed by the reopenings,” said Shawn Cruz, manager of trader strategy at TD Ameritrade. “Restaurants can reopen to a certain extent. Stores can reopen a little bit. Hospitals can do elective procedures. That’s where the gains came from, and I think it's encouraging that as we reopen we see that immediate response in the labor market.”
Cruz added that he thinks Friday’s report will make the stock market more sensitive to reopening headlines going forward.
“It showed we’re going in the right direction, and it made the Covid headlines more important because now it establishes a direct linkage between jobs and stay at home orders, restrictions, etc.”
This week, investors will get major economic updates from the world’s two largest economies on Friday when both the U.S. and China report retail sales numbers for the month of July.
Earnings winner: Disney
Walt Disney stock was a big earnings winner last week, gaining 12.4% after the company reported a surprise profit in the second quarter and said its streaming services now have more than 100 million paid subscribers.
This week, investors will turn their attention to earnings reports from Duke Energy and Royal Caribbean Cruises on Monday, Sysco on Tuesday and Lyft on Thursday.
So far this earnings season, S&P 500 companies have reported earnings that are a record 21.8% higher than consensus analyst estimates, according to FactSet.
Benzinga is a financial news and data company headquartered in Detroit
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