U.S. stocks traded slightly higher Tuesday, with the S&P 500 and Nasdaq Composite both on track for record finishes as bulls continue to find fuel in the formal full approval a day earlier of a COVID-19 vaccine and as investors await a speech at the end of the week from Federal Reserve Chairman Jerome Powell.
What major stock indexes are doing
The Dow Jones Industrial Average
rose 61.92 points, or 0.2%, to 35,397.63.
The S&P 500
edged up 11.14 points, or 0.3%, to trade at 4,490.67, hitting an all-time intraday high and on track to finish above its record close of 4,479.71 set on Aug. 16.
The Nasdaq Composite
built on its record finish from Monday, advancing 82.37 points, or 0.6%, to 15,025.02.
On Monday, the Dow Jones Industrial Average rose 215 points, the S&P 500 rose 0.9% to its second-highest level ever, and the Nasdaq Composite jumped 1.6%.
What’s driving the market?
Stocks were building on Monday gains that were tied to full U.S. regulatory approval of the COVID-19 vaccine manufactured by Pfizer Inc.
and BioNTech SE
which is seen clearing the way for more employer mandates aimed at halting the spread of the delta variant of the coronavirus.
“The delta variant remains a key risk to economic growth and the Fed’s timeline” for beginning to scale back its monthly purchases of Treasurys and mortgage-backed securities, said Lauren Goodwin, economist and portfolio strategist at New York Life Investments, in a note.
“Our best guess is that the variant does not derail, but slows, the recovery,” she wrote. “Consumers have learned to live with the virus, and the widespread availability of now FDA-approved vaccines may make renewed shutdowns politically difficult. Consumers will continue to rely on healthier finances and excess savings to fuel strong spending this year.”
Meanwhile, the rebound by equities shows that, for now, “dips continue to be shallow and rapidly bought into, with the 50-day moving average remaining well-defended by equity bulls, and the market printing new all-time highs with regularity,” said Michael Brown, senior market analyst at Caxton FX.
Investors are also awaiting the Jackson Hole Federal Reserve gathering where Chair Jerome Powell will speak virtually on Friday, and were encouraged by reports that U.S. Treasury Secretary Janet Yellen supports the reappointment of Powell to lead the central bank for another four years.
In other news, President Joe Biden on Tuesday was meeting with other leaders of the Group of Seven nations, who were expected to press him to keep U.S. troops in Afghanistan beyond an Aug. 31 deadline.
Investors have largely ignored chaos around Afghanistan following the Taliban takeover of the country, but analysts have warned that underlying risk levels related to geopolitical threats and terrorism have increased.
“The Biden administration’s decision to pull troops out of Afghanistan further reflects an ongoing tilt in U.S. foreign policy priorities away from the Middle East,” Goodwin said.
“Strategic policy shifts have important implications for investors’ strategic asset allocation, including geographic, sector and style preferences — but past events have illustrated that these implications are unlikely to play out in short-term market events,” she wrote.
Investors were also keeping an eye on legislative wrangling around infrastructure and other spending initiatives. House Democrats deadlocked Monday night, with moderates resisting an effort by party leaders to tie together a $1 trillion package of infrastructure spending, which passed the Senate with a bipartisan majority, and a $3.5 trillion package of social spending supported by Democrats.
The second-quarter corporate earnings season is nearly over with more than 90% of S&P 500 index companies reporting. S&P 500 companies may have grown earnings by 94.7% year over year, according to Refinitiv.
In U.S. economic data Tuesday, new-home sales increased 1% to an annual rate of 708,000, the government said Tuesday. Compared with a year ago, sales were down more than 27%. Economists polled by MarketWatch had forecast an annual sales rate of 700,000 for July. Additionally, the new home sales figure for June was raised to 701,000 from the initially reported 676,000.
Which companies are in focus?
Best Buy Co. Inc. BBY shares rose 6.6%, after the consumer electronics retailer reported second-quarter earnings that beat expectations and raised its same-store sales guidance for the year.
Shares of Mister Car Wash Inc. MCW dropped 6.2%, after the carwash company announced a secondary offering of 12 million shares by selling stockholders.
Shares of Medtronic PLC MDT advanced 3.7%, after the medical device maker reported fiscal first-quarter profit and sales that beat expectations, and nudged up its full-year earnings outlook, citing a strong recovery from the impact of the COVID-19 pandemic on elective procedures.
Shares of Cigna Corp. CI rose 2.1%, after the insurer announced a $2.0 billion accelerated stock repurchase agreement with Morgan Stanley and JPMorgan Chase Bank.
Advance Auto Parts Inc. AAP reported Tuesday reported fiscal second-quarter profit that topped expectations, but net sales that matched and same-store sales that came up shy, although the full-year outlook was raised. Shares were up 1.3%.
What are other markets doing?
The ICE U.S. Dollar Index
a measure of the currency against a basket of six major rivals was down 0.1%.
Oil futures built on Monday’s rebound, with the U.S. benchmark
up 2.5% at $67.25 a barrel on the New York Mercantile Exchange. Gold futures
ticked up 0.2% at $1,808.90 an ounce, hitting a three-week high.