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Dow Rallies as Bulls Find Value in Energy, Industrials; Virus Spread Slows

Stock Markets Aug 10, 2020 04:02PM ET
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By Yasin Ebrahim

Investing.com – The Dow rallied on Monday as signs that the spread of the Covid-19 is nearing a peak and a jump in energy offset rising U.S.-China tensions and worries over a lack of progress on the next fiscal stimulus package.

The Dow Jones Industrial Average rose 1.3%, or 259 points. The S&P 500 gained 0.29%, and is just 1% below all time highs, while the Nasdaq Composite jumped fell 0.39%.

Energy led the broader market higher on rising oil prices following better-than-expected Chinese economic data and positive comments on the outlook for energy demand from Saudi Aramco (SE:2222).

Aramco chief executive Amin Nasser said on Sunday that global oil demand would continue its recovery as lockdown measures ease. China's gasoline and diesel demand are "almost at pre-COVID 19 levels," Nasser added. "As countries ease the lockdown, we expect the demand to increase."

Industrials were also in favor, led by airlines as data showing air travel over the weekend rose to the highest volume in nearly five months.

American Airlines (NASDAQ:AAL), United Airlines (NASDAQ:UAL) and Delta Air Lines (NYSE:DAL) rose more than 7%.

On the stimulus front, Treasury Secretary Steven Mnuchin attempted to ease worries, insisting that he expects lawmakers to agree on a deal by the end of the week despite reports that talks have reached an impasse.

President Donald Trump's efforts to plug the financial stimulus gap by issuing executive orders to extend unemployment benefits - at a reduced amount of $400, down from $600 a week - did little to ease worries. Economists have warned that the U.S. economy could face darker days ahead without the much-needed stimulus.  

"The U.S. economy is on a path that is about to fork. One way sees a faster recovery with new federal support. The other leads to a double-dip recession and a lagged recovery as households struggle, " Grant Thornton Chief Economist Diane Swonk said.

But signs that the spread of the coronavirus appears to be abating helped to lift investor sentiment on risk.

There were fewer than 47,000 new infections reported Sunday in the U.S., the lowest in about a week, according to data compiled by Johns Hopkins University.

Tech, meanwhile, pared most of its losses, though remained pressured as rising U.S-China tensions have sparked uncertainty in the sector.

Beijing said it would sanction 11 U.S. senators in retaliation for similar measures carried out by the Trump administration against Chinese and Hong Kong officials last week.

Apple (NASDAQ:AAPL), however, helped cushion the downside in tech, rising more than 1.6% after Wedbush lifted its price target on the stock to $515 from $475, citing expectations that the upcoming launch of the iPhone 12 will spark a jump in upgrades.

Amazon.com (NASDAQ:AMZN), down nearly 0.6%, was also in the spotlight on reports that the e-commerce giant was in talks with U.S. shopping mall owner Simon Property (NYSE:SPG) to covert JCPenney and Sears department stores into fulfillment centers.

Among consumer discretionary companies, Foot Locker (NYSE:FL) reported an 18% rise in same-store sales and earnings in the fiscal second quarter that beat Wall Street estimate, sending its shares more 8% higher. Foot Locker is slated to report full-quarterly earnings on Aug. 21.

In other news, Eastman Kodak (NYSE:KODK) slumped 28% as its $765 million loan from the federal government was placed on hold amid allegations of insider trading.

Dow Rallies as Bulls Find Value in Energy, Industrials; Virus Spread Slows
 

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Comments (7)
Kelly Mayer
Kelly Mayer Aug 10, 2020 7:26PM ET
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New drug coming up, Trump just announced it. You take it and you get out of the hospital in the same day or a couple of days later. He said he would prefer this drug rather than the vaccine, but we're getting both. Could it be Aviptadil ? They are also testing Remdesivir with other drugs and antivirals. Epic research advances happening regarding Covid. Even if we get new surges, they are bound to be less and less dangerous.
Jerry Galasso
Jerry Galasso Aug 10, 2020 7:26PM ET
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Well if Trump says it then it must be true!
Ronald Warren
Ronald Warren Aug 10, 2020 7:26PM ET
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On Saturday, Trump couldn't remember the name Coronavirus on national TV. I was rolling!!
Kelly Mayer
Kelly Mayer Aug 10, 2020 7:26PM ET
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Ronald Warren I watched the same conference as you did. And i disagree with you. My take was that he made the mistake of calling it "corona" virus when he has always been calling it the "China" virus at first lately. He couldn't take back "corona" and replace it with "china". Though he did later on call it the china virus again. Please don't mistake Trump for Biden. It just won't stick.
Ben Ramirez
Ben Ramirez Aug 10, 2020 7:13PM ET
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Virus spread slows....Lol. That's funny. Wait til Oct.
Keng He
Keng He Aug 10, 2020 7:13PM ET
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yes, October flu plus covid virus. it will be funny
Jins Ho
Jins Ho Aug 10, 2020 6:22PM ET
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The markets are up and there's money to be made. What's there to complain?
Ronald Warren
Ronald Warren Aug 10, 2020 6:22PM ET
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The market isn't worth what you're paying for it. A proper correction. and we could work our way back up. Too risky for me to buy. Too many things could go wrong.
Andrew carson
Andrew carson Aug 10, 2020 6:07PM ET
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The oil story sounds kinda fishy
Kelly Mayer
Kelly Mayer Aug 10, 2020 6:07PM ET
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Fish Oil ???
Andrew carson
Andrew carson Aug 10, 2020 6:07PM ET
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Lakshmana Reddy
Lakshmana Reddy Aug 10, 2020 4:16PM ET
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Articles for name sake😏
Pietro Rosato
Pietro Rosato Aug 10, 2020 4:12PM ET
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This is the Federal Reserve buying it all. the virus is slowing down, really? Then open the whole country now, this is complete bs
Edward Chong
Edward Chong Aug 10, 2020 4:12PM ET
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haha b.s or not. mkt is still going up cheers !!!
Christine Michaels
Christine Michaels Aug 10, 2020 4:12PM ET
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if the test results are not coming in on a timely fashion, it may look like the virus is slowing down. Yes the Dow is up but where else is someone supposed to invest if rates are at rock bottom.
Adrian White
Adrian White Aug 10, 2020 4:12PM ET
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Pietro, the Fed is actually not buying stocks at all. They've only been buying bonds. However, indirectly that has caused more stock buying since it has driven bond yields so low, so investors have rotated from bonds to stocks.
Selfmade DC
Selfmade DC Aug 10, 2020 4:09PM ET
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What rally?
Adrian White
Adrian White Aug 10, 2020 4:09PM ET
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A 357 point rally [1.3%]
 
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