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US open: Stocks extend gains amid data onslaught

Wed 05 August 2020 15:31 | A A A

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6007.05 | Negative 42.87 (0.71%)
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(Sharecast News) - Wall Street stocks opened higher on Wednesday as market participants looked to Washington for news on another Covid-19 stimulus package and thumbed over a slew of data releases.

As of 1530 BST, the Dow Jones Industrial Average was up 1.01% at 27,100.44, while the S&P 500 was 0.57% firmer at 3,325.52 and the Nasdaq Composite came out the gate 0.32% stronger at 10,976.30.

The Dow Jones opened 271.97 points higher on Wednesday, extending gains recorded in the previous session amid reports of possible further fiscal stimulus in the pipeline and some positive news on the pandemic front.

Investors were still closely monitoring the stimulus discussions on Capitol Hill at the open on Wednesday, with both the White House and Democratic Congress members indicating some progress had been made in negotiations. However, the two parties were said to still be separated on several key issues.

Corporate news was also being digested on Wednesday, with a stronger-than-expected set of earnings from Disney leading to some optimism among traders, with profits of $0.08 per share, while analysts expected a loss of $0.64, as it hit 100m paid subscribers across its streaming services.

CVS raised its full-year guidance after topping earnings per share estimates, while Moderna shares were higher after revealing it had received roughly $400m of customer deposits for the supply of its Covid-19 vaccine candidate.

Humana shares rallied after it said both profits and revenues had risen above expectations in the second quarter of its trading year, while Johnson & Johnson shares ticked up after striking a $1bn deal with the US government to manufacture 100m doses of its coronavirus vaccine candidate, assuming it proves to be successful.

Etsy, Boku and Square will all post earnings after the close.

Also in focus was news that senior US and Chinese officials were planning to assess the pair's trade agreement later in August amid heightened tensions between the countries. The discussion on the so-called phase-one deal, led by US trade representative Robert Lighthizer and Chinese vice-premier Liu He, will reportedly take place on or around 15 August - six months after the agreement first came into effect.

Gold prices also crossed the psychologically important $2,000 per ounce mark.

On the macro front, despite another new low set last week, mortgage application volume decreased 5.1% week-on-week, according to the Mortgage Bankers Association. However, demand was still considerably higher for refinances and purchase applications than it was at the same time a year earlier.

Elsewhere, the US labour market recovery slowed sharply in July as the private sector added 167,000 jobs last month, according to the ADP National Employment Report. However, the coronavirus-fuelled slowdown continued to impact businesses across all sizes and sectors as the figure came in well and truly short of forecasts for a print of 1.9m and the readings of 3.3m and 4.3m in May and June, respectively.

Still on data, the US' trade deficit fell 7.5% to $50.7bn in June, according to the Commerce Department, with both exports and imports showing signs of recovery from the coronavirus-fuelled recession. Exports rose 9.4% to $158.3bn, while imports increased 4.7% to $208.9bn.

Lastly, economic activity in the US' service sector expanded at a robust pace in July, with the Institute for Supply Management's non-manufacturing PMI rising from 57.1 in June to 58.1 - topping market expectation of 55 - and IHS Markit's services purchasing managers' index improved from 47.9 in June to 50 in July - better than the previous estimate and market expectations of 49.6.

Still to come, Federal Reserve Bank of Cleveland president Loretta Mester will deliver a speech at 2200 BST.

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