USA stocks edge up as market digests protests, reopenings

Marco Green
June 2, 2020

USA stocks rebounded Monday as Wall Street cautiously bet on an economic recovery despite mounting unrest over police brutality and continued tensions with China.

National Guard troops were deployed over the weekend in 15 states and Washington, an attempt to quell a sixth night of violence that began with peaceful protests over the death of a black man, George Floyd, in police custody.

After opening lower, the Dow pushed higher and finished up 0.4 percent at 25,475.02.

Advancing issues outnumbered decliners by a 3.46-to-1 ratio on the NYSE and by a 2.24-to-1 ratio on the Nasdaq.

Further weighing on sentiment, China ordered state-owned firms to halt purchases of U.S. soybeans and pork, in retaliation for President Donald Trump's announcement that he would end special treatment for Hong Kong following China's move to tighten security measures in the territory.

But economic data boosted investor sentiment, with the Institute for Supply Management's (ISM) purchasing managers' index (PMI) showing the contraction of factory activity was slowing.

The Commerce Department said that USA construction spending fell 2.9% in April, after a flat reading in March. The company's shares first dropped after market close on Friday, when it said that it would stop a potential breast cancer treatment.

Markets are boosted by relief that the USA hasn't taken tougher measures, which could potentially have devastated the Hong Kong economy and had wider regional effects, according to Alex Au, managing director at Alphalex Capital Management, a hedge fund based in Hong Kong.

But markets have taken solace in the signs that rising US-China tensions do not threaten a trade detente between the two countries.

"I'm stunned at how well the market's been doing".

More than 6 million cases of coronavirus have been confirmed around the world, including more than 1.7 million in the U.S. Hackett added, however, that valuations are at their highest levels in almost two decades, suggesting "markets are due for a breather following an unprecedented rally".

"The main downside risk facing stocks is a second wave of the disease", said Peter Berezin, chief global strategist at BCA Research, in a note to clients. The Nasdaq Composite.IXIC was up 57.66 points, or 0.61%, at 9,547.54. "If fears of a new outbreak were to escalate, risk assets would suffer".

The U.S. labor market report on Friday will probably show American unemployment soared to 19.6% in May, the highest since the 1930s. Gold futures edged down 0.06%. Non-manufacturing PMI rose to 53.6 in May, up slightly from April's reading of 53.2 and construction activity rose 1.1 points to 60.8 in May from the previous month.

Other reports by Click Lancashire

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