Monday August 3rd

3-08-2020

Dow futures rise 150 points as Apple leads tech shares higher

U.S. stock index futures were higher on Monday as tech shares led the way. Traders also turned their attention to Washington as lawmakers struggle to make progress on a new stimulus package. Dow Jones Industrial Average futures rose 164 points, or 0.6%. S&P 500 and Nasdaq 100 futures gained 0.6% and 0.8%, respectively. Apple shares rose more than 1% and Amazon gained 0.4%. Microsoft, meanwhile, gained 2.3% after confirming it was in talks to buy social video app TikTok. Stock futures got a boost after Eli Lilly said it began phase 3 trials of a drug aimed at preventing coronavirus. Shares of Eli Lilly rose more than 2% in the premarket. Monday’s gains come after a mostly positive week on Wall Street and blowout earnings reports from some of the nation’s largest consumer technology companies. Apple, Amazon and Facebook all posted far-better-than-expected profit results Thursday evening that showed even one of the worst pandemics in the modern era has yet to have a material impact on their bottom lines. Apple, which blew past both overall and iPhone sales expectations, saw its shares rise more than 10% on Friday. Google-parent Alphabet stock, however, lagged the rest of the mega-cap tech names Friday after posting a decline in revenues for the first time in the company’s history. Still, the resilience in big tech helped round out both a mostly positive week and a decidedly strong month for U.S. stocks. The major equity averages ended July with solid gains and posted their fourth straight positive month. The S&P 500 gained 5.5% in July, while the Dow and the Nasdaq Composite rose 2.3% and 6.8%, respectively. But with some of Wall Street’s most important second-quarter earnings reports over, investor attention now shifts in earnest to Washington between Covid-19 relief and an upcoming jobs report. “Increased unemployment claims and decreasing consumer confidence show some deterioration of the U.S. consumer backdrop,” wrote Dennis DeBusschere, market strategist at Evercore ISI. “If an agreement to extend unemployment support passes soon, the nascent Cyclical/risk-on rally from earlier in July can continue,” he added. “Until then, risk-on factors will face headwinds despite the sharp decline in COVID net hospitalizations.” Republican and Democratic lawmakers remain at a standstill over some components of the next coronavirus relief legislation. The key debate that separates the two parties is the federal boost to unemployment assistance, which was set at $600 per week in March but recently expired. While the White House has come out in favor of reducing the federal assistance to $200 a week, Democrats have called for keeping it at the $600 level. Traders and economists alike are also eager for the July jobs report, which the Labor Department is scheduled to release on Friday. The once-a-month jobs update will be of critical importance this month, especially since the number of people filing for unemployment benefits has been edging higher. According to Refinitiv, about 1.36 million new jobs are expected, well below the 4.8 million added in June, and the unemployment rate is expected to fall to 10.7% from 11.1%. Still, market moves around the release could be mixed given the disparity in forecasts. Some economists expect more than 2 million jobs were added, and some even see flat or negative payrolls. Stocks in Asia Pacific were mixed on Monday as U.S.-China tensions continue to heat up. In Japan, the Nikkei 225 jumped 2.24% to close at 22,195.38, while the Topix index advanced 1.78% to end its trading day at 1,522.64. Those moves followed the nearly 3% tumble in Japanese stocks on Friday. Mainland Chinese stocks were higher on the day, with the Shanghai composite up 1.75% to about 3,367.97 and the Shenzhen component rising 2.395% to around 13,964.56. The Hang Seng index in Hong Kong shed 0.56% to close at 24,458.13. South Korea’s Kospi closed fractionally higher at 2,251.04. Oil prices fell on Monday on oversupply concerns as OPEC and its allies wind back production cuts in August and a rise in worldwide COVID-19 cases points to a slower pick-up in fuel demand. Brent crude futures slid 26 cents, or 0.6%, to $43.26 a barrel by 0253 GMT. U.S. West Texas Intermediate (WTI) crude futures were down 29 cents, or 0.7%, at $39.98 a barrel. Gold hit a record high on Monday as fears over the economic fallout from rising coronavirus cases bolstered its safe-haven appeal, before inching lower as an uptick in the dollar fuelled some profit-taking. Spot gold had eased 0.2% to $1,971.52 per ounce, after hitting a record high of $1,984.66 in early Asian trade. U.S. gold futures were 0.1% higher at $1,988.