TOPLINE
The stock market finished higher on Monday, as coronavirus stimulus talks remained deadlocked and President Trump signed several executive orders over the weekend to extend economic relief to Americans amid the pandemic.
The market has had a strong start to August so far.
KEY FACTS
The Dow Jones Industrial Average was up 1.3%, over 350 points, on Monday, while the S&P 500 rose 0.3% and the tech-heavy Nasdaq Composite lost 0.4%.
Boeing and Nike were among the best-performers in the Dow, while transportation stocks also surged. Shares of Big Tech companies like Microsoft, Netflix and Facebook led the market’s declines, dragging the Nasdaq lower.
Shares of airlines soared after federal data showed air travel returning to its highest level in nearly five months: American, Delta and United Airlines all jumped by between 7% and 10%.
After coronavirus stimulus talks between Democrats, Republicans and the White House ended in a stalemate last week, President Trump on Saturday signed several executive orders to extend economic relief programs.
The orders would expand federal unemployment benefits—at a reduced rate of $400 per week, defer student loan payments through 2020, extend a federal moratorium on evictions and provide a payroll tax holiday.
Trump’s executive action was met with criticism from both parties and is likely to face legal challenges, since continuing the programs would require federal funding from Congress.
Meanwhile, Twitter became the latest company to show interest in buying Chinese-owned social media app TikTok, although Microsoft is still seen as the most likely candidate to close a deal.
Shares of Eastman Kodak, on the other hand, plunged by up to 43% on Monday amid news that the company’s $765 million federal loan will be put on hold as regulators look into allegations of wrongdoing.
What to watch for
Market sentiment also took a hit from ongoing U.S.-China tensions, which have continued to deteriorate in recent weeks over a range of issues including Hong Kong, technology companies and the coronavirus pandemic. Following a fresh round of U.S. sanctions on Chinese officials—including Hong Kong leader Carrie Lam—last week, China on Monday imposed sanctions on 11 U.S. citizens, including Sens. Ted Cruz (R-Tex.), Marco Rubio (R-Fla.), Tom Cotton (R-Ark.), Josh Hawley (R-Mo.) and Pat Toomey (R-Pa.).
Crucial quote
“Trump’s executive orders dominated the weekend news, but these should be considered a political gesture aimed at creating the illusion of action for November rather than a genuine attempt to bolster the economy,” says Vital Knowledge founder Adam Crisafulli. “It still seems that a negotiated deal on formal fiscal legislation remains more likely than not, and it wouldn’t be surprising to see the two sides resume negotiations in the coming days.”
Surprising fact
So far, 448 companies in the S&P 500 have reported second quarter earnings, with nearly 82% beating Wall Street expectations—the highest rate on record dating back to 1994, according to Refinitiv data. Just over 16% of companies so far have missed expectations.
Key background
Stocks posted strong gains last week to kick off the month of August, with the Dow climbing 3.8%, its biggest weekly gain since June. The S&P moved 2.5% higher, now sitting just over 1% below its record high set back in February. The market’s gains were also in large part boosted by continued strength in Big Tech stocks: Shares of Facebook, Apple and Microsoft rallied more than 3% last week.
Further reading
Dow Turns Positive After U.S. Economy Adds Nearly 1.8 Million Jobs In July (Forbes)
Gaming Stocks Plummet On Trump Executive Order Scare (Forbes)
Here’s What China Says About TikTok Being Sold To Microsoft, Potential Ban (Forbes)
