While investors continue to remain optimistic, focusing on promising vaccine news and strong earnings from some key financial names, surging virus cases in the U.S. are putting an already tenuous recovery in jeopardy. On Monday, the Dow had climbed more than 500 points, but sentiment shifted abruptly over news that California had re-imposed restrictions on businesses as virus cases continued to spike. Although the Dow finished slightly in the black, the Nasdaq dropped 227 points, while the TSX surrendered 74. Wall Street climbed back on Tuesday as investors piled into energy and materials stocks. The Dow finished more than 2% higher, while the TSX jumped nearly 270 points, buoyed by the energy sector, which climbed more than 4%.
It was another strong day for N.A. markets on Wednesday as major indexes climbed over promising early data for a potential Covid-19 vaccine and strong earnings from some key banks. However, earnings for S&P 500 companies are expected to have declined nearly 45% from the second quarter of 2019, which would mark the steepest year-over-year drop since 2008, according to FactSet.
Also on Wednesday, as expected, the Bank of Canada held its overnight rate at 0.25%. Bank officials indicated that near- zero rates would probably be the new norm for the next two years.
Looking at economic data, U.S. retail sales increased 7.5% in June as stores and restaurants reopened and consumers resumed spending on big-ticket items. Meanwhile, new U.S. jobless claims held nearly steady last week at 1.3 million, after a period of larger declines, suggesting that re-imposed coronavirus restrictions are negatively impacting the U.S. labour recovery. In light of the mixed data, U.S. stocks declined modestly Thursday, with the Dow down 0.5%, while the TSX was also off slightly.
Finally, Chinese stocks suffered their biggest drop Thursday in more than five months, tumbling 4.5% on new worries over rising infections and a stalling global economy.
source https://richarddri.ca/n-a-markets-remain-resilient-despite-surging-coronavirus-numbers/
Dri Financial Group 