Dow rises for a fourth straight day, rallies 280 points as Disney shares surge
Stocks rose on Wednesday on the back of coronavirus vaccine hopes and strong earnings from Disney. However, gains were capped as July private payrolls data disappointed and lawmakers continued negotiations on a new virus stimulus package.
The Dow Jones Industrial Average gained 280 points, or more than 1%. The S&P 500 advanced 0.5% and the Nasdaq Composite climbed 0.3% to a record high. Both the Dow and S&P 500 were on pace to post their fourth consecutive daily gains. The Nasdaq was headed for a six-day winning streak.
Disney earned 8 cents per share, while analysts expected a loss of 64 cents per share. Disney said it now has 100 million paid subscribers across its streaming services, which include Disney+, Hulu and ESPN+. Disney shares popped 10.7%.
Johnson & Johnson announced it struck a $1 billion deal with the U.S. government to manufacture 100 million doses of its coronavirus vaccine candidate if it proves successful. J&J shares rose 0.9%. Novavax shares jumped 14.3% after the company reported phase one vaccine trial results that showed a positive immune response among patients.
Monday’s gains put the S&P 500 just 2% below an intraday record set on Feb. 19.
Ari Wald, head of technical analysis at Oppenheimer, points out that while the rally from the March low has been “concentrated” in a small group of stocks, it’s only a matter of time until the rest of the market participates in the surge.
“We haven’t gotten the all-clear,” said Wald. But “One by one, you’re going to see these areas that haven’t participated start to break out to the upside … You want to see more stocks trading above their 200-day moving average on the NYSE. That usually marks the start of a steadier bull market.”
ADP payrolls data disappoints
ADP reported Wednesday that private payrolls in the U.S. increased by just 167,000 in July. That’s well below a Dow Jones estimate of 1 million and represents a tumble from the 4.314 million added in June.
The ADP report is seen as a preview to the government’s monthly jobs report, which is forecast to show a gain of more than 1.2 million jobs.
To be sure, the Institute for Supply Management’s non-manufacturing PMI showed a bigger-than-expected expansion in the U.S. services sector, coming in at 58.1. Economists polled by Dow Jones expected a print of 55.
Traders also grappled with continuing talks in Washington over a new coronavirus stimulus package.
The White House and Democratic congressional leaders have reported some progress in the negotiations, but they remain apart on certain issues.
“The bottom line is that if we do see real disappointment in stimulus or the vaccine, then a 10% correction is the likely best-case scenario, and it’ll come quickly,” said Tom Essaye of The Sevens Report, in a note. “We cannot be complacent.”
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