Wall Street closed mixed on Tuesday despite the fact that the S&P 500 reached a fresh all-time high after six months. Uncertainty about a new fiscal stimulus also dented investors’ confidence. Both the S&P 500 and the Nasdaq Composite ended in the green while the Dow finished in red.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) dropped 0.2% to close at 27,778.07. Notably, 18 components of the 30-stock blue-chip index ended in the red while 12 finished in green. However, the tech-laden Nasdaq Composite ended in positive territory to close at 11,210.84, surging 0.7%. This was the 34rd closing high for the index so far this year. In the intraday trading, the tech-heavy index recorded all-time high at 11,230.62.
Meanwhile, the S&P 500 rose 0.2% to end at 3,389.78, marking its 14th closing high year to date. In the intraday trading, the broad-market index posted a fresh all-time high at 3,395.06. The Communication Services Select Sector SPDR (XLC) gained 0.9% while the Energy Select Sector SPDR (XLE) tumbled 1.3%. Notably, four out of eleven sectors of the benchmark index closed in positive territory while seven in negative territory.
The fear-gauge CBOE Volatility Index (VIX) was up 0.8% to 21.51. A total of 8.2 billion shares were traded on Tuesday, lower than the last 20-session average of 10 billion. Decliners outnumbered advancers on the NYSE by a 1.40-to-1 ratio. On Nasdaq, a 1.66-to-1 ratio favored declining issues.
S&P 500 Reaches a Fresh High in Six Months
It takes six months, from Feb 19 to Aug 18 for the S&P 500 index to erase all coronavirus-induced losses. The index started 2020 from where it ended 2019 with a fabulous gain of 28.9%. Since Jan 2 to Feb 19, the benchmark recorded thirteen all-time highs. On Feb 19, the index recorded an all-time high of 3,393.52 and closing high of 3,386.15.
Since Feb 20, the downturn of the index started as the pandemic spread globally and the index fell in bear market on Mar 12. The downfall continued till Mar 23 and by that day the index plunged 35.4%. The S&P 500 took a northward journey from Mar 24 buoyed by unprecedented fiscal and monetary stimulus.
Finally, on Aug 18, the S&P 500 recorded its 14th all-time high so far this year at 3,395.06 and closing high of 3,389.78. During Mar 23 to Aug 18, the benchmark rallied an astonishing 54.7%. Just three days ago, the index recorded its best-ever 100-day performance.
Technology behemoths such as Apple Inc. AAPL, Microsoft Inc. MSFT, Amazon.com Inc. AMZN and Facebook Inc. FB are major drivers of the S&P 500’s rally. Apple sports a Zack Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Delay in Fresh Fiscal Stimulus
Negotiations between the Republicans and Democrats fell apart. Treasury Secretary Steven Mnuchin said that the Trump administration is ready to further negotiate with Democrats and may provide more money as fiscal stimulus if it was required for an amicable solution.
Mnuchin said that President Trump ” wants to provide money for kids and jobs, a second round of the PPP and to help small businesses cover payroll during the pandemic.” Notably, the unemployment benefit of $600 per week came to an end by the end of July. Meanwhile, new trench of stimulus are unlikely to come before September.
Economic Data
The Department of Commerce reported that U.S. Housing Starts jumped 22.6% in July to a seasonally adjusted 1.496 million units compared to the consensus estimate of 1.241 million units. June’s data was revised to 1.22 million units from 1.186 million units reported earlier. Year over year, the metric climbed 23.4%.
Building Permits came in at 1.495 million units in July compared to the consensus estimate of 1.333 million units. In this case as well, June’s data was revised to 1.258 million units from 1.241 million units reported earlier. The metric surged 18.8% monthly and gained 9.4% year over year.
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