Stocks rally as slow coronavirus-relief talks move in 'right direction'

By Jonathan GarberFOXBusiness

Microsoft has until Sept. 15 to strike a deal for TikTok's US operations

U.S. equity markets rallied Tuesday morning after a Democratic negotiator said deadlocked Congressional talks on coronavirus relief, including extra unemployment benefits that boosted the economy before running out last month, were moving in the "right direction."

The Dow Jones Industrial Average gained 123 points, or 0.46 percent, while the S&P 500 gained 0.17 percent. The tech-heavy Nasdaq touched a record high before dipping back into the red late in the morning.

An all-time high at closing would be the Nasdaq's 30th of the year and 156th under President Trump.

Ticker	Security	Last	Change	Change %
I:COMP	NASDAQ COMPOSITE INDEX	10895.760821	-7.04	-0.06%
SP500	S&P 500	3298.32	+3.71	+0.11%
I:DJI	DOW JONES AVERAGES	26736.93	+72.53	+0.27%

Democrats and Republicans "remain far apart on a number of issues. But we're finally moving in the right direction," Minority Leader Chuck Schumer, the Senate's top Democrat, said on the chamber floor, according to Reuters. "At the moment, the gap between our two parties in the negotiations is about priorities and about scale."

Lawmakers are set to resume talks at 3:30 p.m. ET, the news service reported.

Treasury Secretary Steven Mnuchin said after talks on Monday that negotiators made a “little bit of progress,” but were divided on key issues including an extra $600-per-week unemployment benefit that supplemented state payouts.

GOP leaders want to cut the payment to $200, arguing that the higher amount prompts lower-paid workers not to return to their jobs.

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Looking at stocks, Ford CEO Jim Hackett has stepped down effective Oct. 1 and will be replaced by COO Jim Farley. Shares of the automaker had fallen 40 percent through Monday since Hackett took over as CEO more than three years ago,

Microsoft shares remain in focus as the company continues talks with China-based Bytedance for the U.S. operations of social-media app TikTok. Trump, who has threatened to ban the popular app in the U.S., said on Monday that Microsoft has until September 15 to reach a deal.

Ticker	Security	Last	Change	Change %
F	FORD MOTOR COMPANY	6.76	+0.07	+1.12%
MSFT	MICROSOFT CORP.	211.82	-4.72	-2.18%
BP	BP PLC	23.57	+1.48	+6.68%

On the earnings front, BP booked a $10.9 billion writedown on its way to a quarterly pre-tax loss of $16.8 billion. The London-based oil giant cut its 10.5-cent-per-share dividend in half and said it would aim to reduce net carbon emissions from oil and gas by as much as 40 percent over the next decade.

Apparel maker Ralph Lauren said same-store sales in the three months through June plunged 57 percent from a year ago as COVID-19 shuttered shops around the world.

FORD CEO JIM HACKETT TO STEP DOWN

Take-Two Interactive reported a 54 percent jump in quarterly revenue and raised its earnings forecast after the video-game maker saw surging demand amid the coronavirus pandemic.

Ticker	Security	Last	Change	Change %
RL	RALPH LAUREN CORP	65.18	-4.54	-6.51%
TTWO	TAKE TWO	176.58	+8.89	+5.30%
AAPL	APPLE INC.	440.06	+4.30	+0.99%

Meanwhile, Apple continues its quest to become the first company to reach the vaunted $2 trillion market value. The tech giant, which finished the prior session with a market cap of $1.86 trillion, needs shares to close at or above $467.77 to reach the mark.

Looking at commodities, West Texas Intermediate crude oil was up 63 cents at $41.64 per barrel while gold was up $26.30 at $2,012.60 an ounce.

RISK OF DELAYED, DISPUTED ELECTION RESULTS LOOMS OVER MARKET RALLY

U.S. Treasurys gained, pushing the yield on the 10-year note down by 2.5 basis points to 0.538 percent.

In Europe, Germany's DAX was down 0.46 percent while Britain’s FTSE slipped 0.08 percent. France's CAC 40 rose 0.26 percent.

Markets rallied across Asia, with Hong Kong’s Hang Seng climbing 2 percent, Japan’s Nikkei adding 1.7 percent and China’s Shanghai Composite edging up 0.11 percent.

Source: Fox Business

Stocks tread water as earnings season gathers pace

By Caitlin OstroffThe Wall Street Journal

Futures indicate the S&P 500 could come under pressure after the New York opening bell

U.S. stock futures wavered Tuesday as a slew of major companies reported earnings, some of them beating already low expectations from coronavirus economic troubles.

Futures tied to the S&P 500 declined 0.3%, indicating that the benchmark index could come under pressure after the New York opening bell. The pan-continental Stoxx Europe 600 fell 0.2%.

In Europe, shares in BP climbed 6.4% after the British oil-and-gas producer slashed its quarterly dividend for the first time in a decade and launched a new strategy to pivot away from oil and gas. Discount airline easyJet rose 8% on a better-than-expected outlook.

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Private-equity firm KKR & Co. and energy company Exelon are among those reporting quarterly profits before the opening bell. More than three-quarters of S&P 500 companies have reported earnings, with the majority beating analyst expectations, according to UBS. This has led estimates for the third quarter to rise by 2.5% since the end of June.

Robust earnings from tech companies have lifted U.S. stock markets higher in recent weeks, with the Nasdaq Composite climbing to a fresh record Monday.

MICROSOFT, APPLE LIFT NASDAQ TO 29TH RECORD CLOSE OF YEAR

Investors, who worried that an uptick of coronavirus infections last month would slow economic recovery, have been closely watching a recent decline in new cases.

“One day’s data doesn’t mean anything, but I’m looking at whether that’s the beginning of a trend,” said Fahad Kamal, chief market strategist at Société Générale’s private banking and wealth management division Kleinwort Hambros.

Bond markets have remained cautious though, with bond yields ticking lower even as stocks have climbed, Mr. Kamal said. The yield on the 10-year Treasury declined to 0.548% from 0.562% Monday.

RISK OF DELAYED, DISPUTED ELECTION RESULTS LOOMS OVER MARKET RALLY

“There’s more truth in the bond market, and if you look at the yields they’re still at record lows. There’s still a very palpable sense of fear among investors that there could be tail risks that materialize,” he said.

Markets are monitoring negotiations among Democratic leaders and White House officials on a new coronavirus aid package. The two sides remain at odds over whether to cut a $600-a-week federal jobless supplement or provide aid to financially strapped states and localities.

“The market’s assumption is that the U.S. economy is not yet ready to stand on its own two feet. It appears that there is agreement that more needs to be done, it’s just about the shape of that package,” said Hugh Gimber, strategist at J.P. Morgan Asset Management.

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Shares in spirits maker Diageo, which owns Johnnie Walker whiskey and Smirnoff vodka among other brands, fell 6.5% after it reported that operating profit fell as the coronavirus pandemic drove down sales in the second half of the year. North American sales were strong as consumers shifted alcohol buying from bars to grocery stores, but the growth didn’t make up for shortfalls in other markets.

Shares in Bayer fell 3.4% after the chemicals and pharmaceuticals company said it swung to a net loss of €9.55 billion ($11.23 billion) in the second quarter. Bayer set aside provisions for its multibillion-dollar settlement with plaintiffs alleging the company’s Roundup herbicides cause cancer.

In the Asia-Pacific region, Hong Kong’s Hang Seng climbed 2%, leading gains in the region. Japan’s Nikkei 225 gained 1.7% and Australia’s benchmark S&P/ASX 200 rose 1.9%.

Walt Disney will report earnings after trading ends.

Source: Fox Business

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com