Wall Street could be heading for a turning point as concerns about the rise in COVID-19 cases continues to undermine confidence.
Even though overall cases in the US are trending lower – especially in the northeast – cases are still rising in at least half a dozen states.
New cases of COVID-19 set records across at least six on Friday states (such as Florida, Texas and Arizona) and mandated mask use is becoming more common as economies continue reopening.
China, where the pandemic first emerged but had been contained, also reported an uptick in new cases of the disease.
Still markets ended the week higher as ongoing signs of economic recovery and stimulus measures helped offset concerns those concerns about “second wave” of coronavirus cases.
US shares were up 1.9%, Eurozone shares rose 3.1%, Japanese shares rose 0.8% and Chinese shares ended Friday up 2.4%. Australian shares also gained 1.6%.
The rally came after a 6 to 7% pullback in share markets and still leaves them below their recent highs.
Bond yields were little changed in the US, Germany and Japan but fell in Australia.
Oil prices and metal prices rose but the iron ore price fell as did the Australian dollar which ended at 68.40, down from 68.80 US cents the week before.
The Dow lost 208.64 points lower, or 0.8%, at 25,871.46, after being as much as 371 points higher at an intraday peak at 26,451.44.
The S&P 500 fell 17.60 points, or 0.6%, to close at 3,097.74, but hit an intraday peak at 3,155.53. The Nasdaq added 3.07 points, less than 0.1%, to close at 9,946.12.
For the week, the Dow rose 1%, the S&P 500 gained 1.9%, and the Nasdaq returned 3.7%.
The S&P 500 and the Dow are now about 9% and 13% shy of their respective all-time highs reached in February.
The tech-heavy Nasdaq is about 1% below its last closing high reached on June 10, after breaching that level earlier in the session.
Undermining confidence on Friday was news that Apple is temporarily shutting some stores again in Florida, Arizona, South Carolina and North Carolina, which have seen a spike in coronavirus cases in recent days.
Friday also saw a big sell from the Fed.
Boston Federal Reserve President Eric Rosengren, in webcast remarks to the Providence Chamber of Commerce, cautioned that the US economy isn’t likely to have a fast recovery and more support will likely be needed from the Fed and Congress, repeating comments from chair, Jay Powell last week.
“Unemployment remains very high, and because of the continued community spread of the disease and the acceleration of new cases in many states, I expect the economic rebound in the second half of the year to be less than was hoped for at the outset of the pandemic,” Rosengren said in his speech
And the Cruise Lines International Association announced on Friday an extension in the voluntary suspension of operations from US ports until at least September 15 from the previous start date of July 24.
Ahead this Thursday sees the release of bank stress tests from the Fed. If they are solid, and if banks are allowed to resume paying higher dividends and resuming buybacks, watch their share prices kick higher and the Dow and S&P 500 with them.
