Markets

Stock Market Update 2020-07-06 12:55:00

12:55PM ET 7/06/2020 Briefing.com

It's another strong outing for stocks, especially technology-related stocks within the Nasdaq Composite (+2.2%). The Nasdaq is trading at a record high and is now up more than 16% this year, while the S&P 500 (+1.4%), Dow Jones Industrial Average (+1.3%), and Russell 2000 (+0.8%) continue to recoup yearly losses. 

The impetus for today's gains has been attributed to some bull-market commentary from a Chinese state-run editorial. China's Shanghai Composite climbed 5.7% on Monday. In the U.S., recovery optimism has been aided by the ISM Non-Manufacturing Index for June, which returned into expansion territory with a 57.1% reading (Briefing.com consensus 49.0%). 

Most stocks are trading higher today, but the most influential gains continue to come from the mega-cap and momentum stocks within the S&P 500 consumer discretionary (+2.4%), information technology (+2.0%), and communication services (+2.1%) sectors. The utilities (-1.7%) and energy (-0.3%) sectors trade lower. 

Some prime stock movers include Amazon (AMZN 3018.50, +12.20, +4.4%), Apple (AAPL 374.69, +10.59, +2.9%), Microsoft (MSFT 210.70, +4.44, +2.1%), Netflix (NFLX 495.76, +18.97, +4.0%), and Tesla (TSLA 1326.13, +117, 13, +9.7%) -- all of which are trading at fresh all-time highs.

In the energy space, Berkshire Hathaway (BRK.B 182.07, +3.24, +1.8%) agreed to acquire Dominion Energy's (D 73.97, -8.72, -10.6%) natural gas assets for $4 billion in cash and assume its debt for $5.7 billion. Dominion also announced the cancellation of the Atlantic Coast Pipeline with Duke Energy (DUK 79.20, -2.63, -3.2%). 

Separately, Uber (UBER 32.54, +1.86, +6.1%) announced an agreement to acquire Postmates for $2.65 billion in stock. UBER shares are up 6%. 

U.S. Treasuries are holding relatively steady, with the 10-yr yield up one basis point to 0.69%, despite the bullish bias in stocks. Investors might be skeptical of the sustainability of the gains, thinking that a pullback is due. The CBOE Volatility Index is up 0.7% to 27.87. 

Reviewing today's economic data: 

The ISM Non-Manufacturing Index for June increased to 57.1% (Briefing.com consensus 49.0%) from 45.4% in May. A reading above 50.0% connotes an expansion in activity. June represented the first month of expanding activity since March.Survey responses reflect changes, if any, in the current month compared to the previous month. The key takeaway, then, is that the June report can't be taken at face value as a "strong" report so much as it can be taken as a report showing stronger activity relative to the depressed activity in May.