Stocks Bounce Off Lows on Fed Announcement…..

U.S. equities bounced off their lows of the day, with the Dow seeing a near 1,000-point reversal intraday, to finish higher after the Federal Reserve announced that it will expand its purchases to include individual corporate bonds as part of its stimulus measures. Early pressure came amid resurfacing uneasiness surrounding a potential second wave of the pandemic, as new COVID-19 cases are being reported in the U.S. and China. Treasury yields were nearly unchanged, and the U.S. dollar and gold lost ground, while crude oil prices were higher. In light economic news, manufacturing activity out of the New York region improved far more than expected in June, but remained in contraction territory for the fourth-straight month. On the equity front, Moderna was higher on reports Israel is in talks to buy a supply of its COVID-19 vaccine candidate, while Shopify rose on a partnership with Dow member Walmart. Europe finished mixed, while markets in Asia were solidly lower.

The Dow Jones Industrial Average rose 158 points (0.6%) to 25,763, the S&P 500 Index increased 25 points (0.8%) to 3,067 and the Nasdaq Composite gained 137 points (1.4%) to 9,726. In heavy volume, 1.2 billion shares were traded on the NYSE and 4.4 billion shares changed hands on the NASDAQ. WTI crude oil moved $0.86 higher to $37.12 per barrel and wholesale gasoline gained $0.05 to $1.17 per gallon. Elsewhere, the Bloomberg gold spot price lost $6.28 to $1,724.47 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was down 0.6% at 96.74.

The stock markets saw early pressure with travel and leisure issues, retailers, financials, and the cyclically-natured energy sector, which all led a three-week charge leading up to last week’s plunge, pacing the pullback, as optimism of re-openings in the wake of the COVID-19 pandemic’s disruption continues to come up against some uncertainty. However, the Federal Reserve announced that it will be expanding its purchases to include individual corporate bonds as part of the stimulus measure put in place in an effort to support market functioning and ease credit conditions to bring stocks into positive territory. The rally that was stymied earlier this month took the Nasdaq back to record highs and saw the S&P 500 flirt with positive territory for the year. Reports of new COVID-19 cases in the U.S. and China shutting down parts of Beijing amid a spike in new cases continue to foster concerns about a second-wave of the pandemic. Amid this backdrop, sectors that had benefited from previous stay-at-home orders, such as consumer staples, technology and communications services stocks, faired relatively better.

Regional manufacturing improves solidly, Treasury yields fall as week begins on shaky footing…..

The Empire Manufacturing Index, a measure of activity in the New York region, rose from -48.5 in May to –0.2 in June, a much larger improvement than the Bloomberg forecast of an increase to -29.6. However, a reading below zero denotes contraction and this was the fourth-straight month of declining output. The stronger-than-expected improvement came as new orders rose solidly, while employment and work hours increased, but all remained in contraction territory.

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