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Dow Gives up Some Gains as Worries Over Stimulus Sours Sentiment

Stock Markets Jul 21, 2020 04:05PM ET
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© Reuters.

By Yasin Ebrahim

Investing.com –The Dow gave up gains on Tuesday as U.S. lawmakers cooled hopes that further stimulus would be rolled out quickly. 

The Dow Jones Industrial Average rose 0.6%, or 159 points. The S&P 500 gained 0.17%, while the Nasdaq Composite 0.81%.

Senate Majority Leader Mitch McConnell reportedly said he does not expect that the bill, which includes new money for the paycheck protection program, and seeks to extend the program by at least six months, would be rolled out within the next two weeks.

The bill will also seek to reduce the current $600 per week bonus being included in unemployment benefits, and doubts remain over whether the payroll tax cut will be included.   

With Congress set for a recess in August, time is running out for lawmakers on Capitol Hill to resolve their difference over the coronavirus aid bill. 

The news on a lack of progress over a stimulus prompted investors to rein in their bullish bets, forcing the broader market to cut its earnings-infused gains.   

Major Dow component Coca-Cola (NYSE:KO) reported second-quarter results that beat on the bottom line, but missed consensus estimates on the top-line, which the beverage and snacks maker blamed on the impact from the pandemic.

International Business Machines (NYSE:IBM), meanwhile, pared the bulk of its gains despite delivering second-quarter results above Wall Street expectations, underpinned by a contribution from Red Hat.

"(W)e think 2Q marks the trough for IBM and the renewed focus on LT growth (vs. NT profit) positions them well to emerge stronger post-COVID," Credit Suisse (SIX:CSGN) said in a note as it upgraded its price target on the stock to $155 from $150.

Energy stocks were the biggest gainers, led by higher oil prices. Recent progress on potential Covid-19 vaccines and a historic €750 billion EU stimulus deal has cooled worries about oil demand weakness, sending oil prices to more than one-month highs.

Occidental Petroleum (NYSE:OXY), Apache (NYSE:APA) and Devon Energy (NYSE:DVN) soared, with latter rising more than 10.50% after Simmons Energy upgraded the stock to an overweight rating.

Financials were also among the biggest gainers, with banks up sharply following their mostly bullish earnings last week.

Wells Fargo (NYSE:WFC) jumped 6.6% after announcing Mike Santomassimo would become replace retiring John Shrewsberry as chief financial officer.

The rally in tech cooled, meanwhile, as the so-called Fab 5, with the exception Alphabet (NASDAQ:GOOGL), faltered. Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), and Amazon.com (NASDAQ:AMZN) struggled to turn positive.

The Chicago Fed Manufacturing Index rose to a reading of 4.11 from 2.61, topping economists' forecast for a treading of 4.00. A reading below zero suggests below-trend growth in the economy and a sign of slowing inflation.

Coronavirus cases in the U.S. topped 3.8 million, with over 140,000 dead, according to Johns Hopkins.

Dow Gives up Some Gains as Worries Over Stimulus Sours Sentiment
 

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Comments (15)
pavel zissu
pavel zissu Jul 22, 2020 2:21AM ET
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well... abviously the administrator is a bot
pavel zissu
pavel zissu Jul 22, 2020 2:21AM ET
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...and you do not like my comments?
Tricky Dick
TrickyDick Jul 21, 2020 7:42PM ET
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Maybe the government can just start giving taxpayer money directly to corporations. Then they won't have to worry about the indirect distribution, and the markets can become even more manic.
Bulls MakeMore
Bulls MakeMore Jul 21, 2020 7:42PM ET
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Yeah, let's hurt employers, then they'll just fire the rest of their human workers and go with cheaper robots, smh. Dems forget that corporations employ people, they're not some evil enemy!
Plopseven Schwartz
Plopseven Schwartz Jul 21, 2020 7:29PM ET
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If you guys invested on hopes that Republicans would provide any stimulus to anyone other than corporations, you should not be investing.
Coby Movahedi
Coby Movahedi Jul 21, 2020 7:29PM ET
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They already said stimulus payments are incorporated in their proposal so not sure what ur saying
Mojo Snake
Mojo Snake Jul 21, 2020 5:39PM ET
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The welfare market might not get it's EBT card recharged. Whaaaa, bunch of babys. The DOW would be below 15000 if it wasn't for all the fake stimulus money.
Mojo Snake
Mojo Snake Jul 21, 2020 5:39PM ET
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Yeah the truth hurts all you thumbs down people. The US will pay for Powell's handling of this situation. He has no clue what he is doing.
Nathan Krisher
Nathan Krisher Jul 21, 2020 5:39PM ET
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Mojo Snake The correct spelling would be babies you illiterate peasant.
Plopseven Schwartz
Plopseven Schwartz Jul 21, 2020 5:39PM ET
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You realize companies can’t turn a profit if everyone is homeless, right?
Tricky Dick
TrickyDick Jul 21, 2020 5:39PM ET
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Nathan Krisher  That was a very useful and informative comment. Thanks for your contribution.
Alexander Abgar
Alex2022 Jul 21, 2020 5:39PM ET
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Plopseven Schwartz at least they will have new age slave force. Citizlaves
Thom Miller
Thom Miller Jul 21, 2020 5:33PM ET
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I see Dr Donny is going to start having CV19 briefings again. Let’s see here. At the last one of these he held two months ago, in order to get control of the virus, he....1) Encouraged Americans to inject themselves with Clorox and 2) Suggested Americans cram a flashlight up their kazoo. My guess is this time around, to rid us of the virus, he’ll ask Americans to strip naked and spray themselves with an orange tanning solution....
Miguel Garcia
Miguel Garcia Jul 21, 2020 5:12PM ET
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Is there any real news app?
Noelle Milton Vega
NYCeyes Jul 21, 2020 5:12PM ET
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No and Yes. There's is InoReader, which has a website and an app. I use it exclusively (and nothing else). It is for news curation, which means you will play an active part in finding alternatives news sites, blogs, feeds and add them to InoReader, and InoReader does the rest. I have never learned as much about what's really going on than by curating my news, which InoReader allow me to do. No excuses now. Go do it.
Ed Glass
EddieG Jul 21, 2020 5:12PM ET
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then, you are living in the bubble.
Overnight trader
Overnight trader Jul 21, 2020 5:01PM ET
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all drama from democrats
Plopseven Schwartz
Plopseven Schwartz Jul 21, 2020 5:01PM ET
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Trump just endorsed a ***on live TV, but sure
Kyle Mack
Kyle Mack Jul 21, 2020 4:33PM ET
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When everyone is using Amzn and Shopify , just invest in that for a stimulus.
Mehdi Mbv
Mehdi Mbv Jul 21, 2020 4:29PM ET
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it's a joke to push the market down and take more profits.....even Europe has passed a generous stimulus package despite its ultra Frugal countries !!!
 
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