Stocks Surrender Early Gains

Marco Green
July 15, 2020

Limiting gains in the Nasdaq and S&P 500, Amazon fell 1.1%, extending a rotation that began Monday out of many big-name technology and momentum stocks that have led much of the US stock market's rebound since March.

You've had headlines about COVID and layoffs and the economy.

US stocks wavered Tuesday as investors parsed earnings results from the biggest banks for insights on the health of the American economy and its lenders.

The S&P 500 technology index fell 2.12 percent, leading declines.

Investors were likely to be interested in banks' trading activities, which will show how they've coped in such a volatile market, said Luc Filip, head of private banking investments at SYZ Private Banking. Citigroup Inc dropped 3.6% as it reported a steep fall in quarterly profit. Citigroup's climbed 1.6% after it said its revenue rose, but its net income slipped due to a higher allowance for credit-loss reserves due to the economic downturn.

Earnings season kicked off in earnest this week with the latest quarterly results from big banks.

Stocks have mostly churned in place since early June.

The S&P 500 posted 38 new 52-week highs and no new lows; the Nasdaq Composite recorded 128 new highs and 22 new lows.

Pulling stocks higher has been a budding economic recovery, with the job market, retail sales and other measures of the economy halting their plunge and beginning to resume growth.

But pushing stocks down are accelerating coronavirus counts in hot spots around the world, which threatens to halt the recovery just as it got going.

As a matter of fact, Monday's sharp drop in S&P subsectors alongside Nasdaq-listed tech stocks came against the backdrop of an announcement of California Governor Gavin Newsom that ordered a massive rollback from the US Government's reopening attempts, as Newsom rode his roughshod over Trump Administration's call to reopen the state by shutting down the bars, banning the indoor dining and restaurant and closing down the churches, hair saloons and gyms.

The worry is that the continuing pandemic could push states across the Sun Belt to roll back reopenings of their economies. Smaller stocks were doing better than the rest of the market, with the small-cap Russell 2000 index up 1%.

Wall Street rose on Tuesday, led by energy and materials, as investors looked beyond a recent surge in coronavirus cases and rotated out Amazon and other recent strong performers.

The S&P 500 is about 6% below its own record high hit in February.

In Europe, France's CAC 40 fell 1%, and Germany's DAX lost 0.8%. The FTSE 100 in London added 0.1%.

In government bond markets, the yield on USA 10-year Treasurys slipped to 0.629% Tuesday, from 0.638% Wednesday.

In Asia, Japan's Nikkei 225 fell 0.9%, South Korea's Kospi slipped 0.1% and Hong Kong's Hang Seng dropped 1.1%. It tends to move with investors' expectations of the economy and inflation. Brent crude, the global standard, gained 0.3% to $42.83 per barrel.

Other reports by Click Lancashire

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