Market Snapshot: Dow on pace to snap win streak, even as tech-heavy Nasdaq touches 10,000 milestone and intraday record high

The Dow was down more than 200 points in the final hour of trade Tuesday, after the Nasdaq Composite touched at fresh intraday high on growing optimism about the economy’s ability to rebound from the coronavirus pandemic.

Read: IPO market gears up for another busy week with 8 deals expected to raise $2 billion

How are benchmarks faring?

The Dow Jones Industrial Average DJIA, -0.75% was off 216 points, or 0.8%, at about 27,355, with the blue-chip gauge on the verge of snapping its longest win streak, six days, since the eight-session stretch ended Sept. 13, 2019. The index, however, is off its Tuesday lows at 27,151.06. The S&P 500 index SPX, -0.46% was down 17 points, or 0.5%, at around 3,215, while the Nasdaq Composite Index COMP, +0.61% turned higher, gaining 51 points, or 0.5%, at about 9,976, after briefly touching 10,000.

Meanwhile, the Nasdaq-100 index NDX, +0.93%, representing the largest companies within the Nasdaq Composite by market value, was up 79 points, or 0.8%, at 9,981.

On Monday, the Dow finished within 7% of its Feb. 12 closing peak, while the S&P 500 index ended the session 4.5% from its Feb. 19 record closing high. The Nasdaq gained 110.66 points, or 1.1%, ending at 9,924.74, marking its first all-time closing record in four months.

What’s driving the market?

The quickest stock market slump on record in February and March has been followed by one of the quickest recoveries ever, fuelled by historic financial aid from the U.S. government and the Federal Reserve.

Those backstops have helped lift not only technology behemoths engaging in swift business during COVID-19 lockdowns, but also lagging value stocks and downtrodden shares of companies hard-hit by the pandemic.

“An incredibly narrow market had been driving the market higher,” said Mike Skillman, chief executive officer of Cadence Capital Management in Boston. “I just knew the spring was getting so compressed,” he told MarketWatch. “The time was getting extraordinarily ripe for this kind of turn to happen.”

By Monday’s close, investors in S&P 500 index stocks had recovered all losses for the year, following data published last Friday that showed American employment surprisingly increased from April to May.

However, the National Bureau of Economic Research also on Monday declared the U.S. recession started in February, ending a 128-month expansion — the longest dating to 1854. The World Bank’s forecast is for the global economy to shrink by 5.2% this year because of the coronavirus pandemic.

A report Tuesday on U.S. small-business owners in May turned more optimistic about an economic rebound and shifted to the view that a coronavirus-induced recession will be “short-lived,” a closely followed survey showed. The optimism of small companies in the U.S. economy rose 4.5 points last month to 94.4, the National Federation of Independent Business said Tuesday. The increase was twice as large as Wall Street had forecast.

“Many money managers have been caught under-invested and they are under tremendous pressure. They have to publish quarterly reports at the end of this month,” wrote independent market analyst Stephen Todd in a Monday research note.

Meanwhile, nearly 10 million people lost their jobs in April after a record 14.6 million were thrown out of work in March, Tuesday data from the Labor Department shows, underscoring the widespread devastation to the U.S. labor market from the coronavirus.

Job openings also fell to 5 million in April from 6 million in the prior month, according to a Labor Department report that’s released with a one-month delay.

Which stocks are in focus?
How did other assets trade?

Oil prices closed higher CLN20, +2.04% Tuesday, on easing concerns about the likelihood of production increases. West Texas Intermediate oil rose 75 cents, or 0.2%, to end at $38.94 a barrel on the New York Mercantile Exchange.

In precious metals, August gold GCM20, +0.80% on Comex climbed $16.80, or 1%, to settle at $1,721.90 an ounce.

The 10-year Treasury note yield TMUBMUSD10Y, 0.827% fell 5 basis points to about 0.82%. Bond prices move in the opposite direction of yields.

The greenback edged 0.3% lower against its major rivals, as gauged by the ICE U.S. Dollar index DXY, -0.28%.

In global equities, the Stoxx Europe 600 index SXXP, -1.22% closed 1.2% lower and the FTSE 100 index UKX, -2.11% fell 2.1%.

In Asia, Japan’s Nikkei NIK, -0.37% closed 0.4% lower, the China CSI 300 000300, +0.62% finished 0.6% higher and Hong Kong’s Hang Seng Index HSI, +1.13% climbed 1.1% higher. South Korea’s Kospi index 180721, +0.21% gained 0.2%.

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