Stocks are adding back Monday losses as Wall Street continues to grapple with conflicting pandemic developments, including coronavirus vaccinations that are finally kicking off amid a worsening near-term outlook for the pandemic, and while fiscal relief remains a key source of uncertainty.
Shortly after the market open, the Dow Jones Industrial Average had jumped 175 points, or 0.6%, while the S&P 500 and tech-heavy Nasdaq both climbed about 0.7%.
Shares of European apparel companies H&M and Zara-parent Inditex both sank on Tuesday morning after the firms reported significant sales declines in recent weeks, of 22% and 19%, respectively, as the pandemic forces retailers to once again shutter locations around the world.
In what could be a grim sign for much of the broader market, the International Energy Agency on Tuesday warned it could take months for coronavirus vaccines to start helping the oil market recover from tanking demand during the pandemic; the agency downgraded its industry forecast for 2021 as a result.
On the deal front, drug-maker Eli Lilly on Tuesday morning said it was acquiring Prevail Therapeutics in a mostly cash deal valued at more than $1 billion, sending shares of Prevail, a gene therapy company with several drugs in its pipeline, soaring nearly 90%.
European markets were mixed on Tuesday, with the United Kingdom’s FTSE 100 edging down 0.4% and Germany’s DAX Index climbing 0.9%, while East Asian markets (such as Hong Kong’s Hang Seng Index, down 0.7%) fell after lukewarm economic data from China.
“New York Governor Andrew Cuomo and New York City Mayor Bill de Blasioâ€™s warnings on Monday about another full NYC lockdown unnerved investors, but there wasnâ€™t a ton of incremental news about Covid mitigation actions overnight, so investors are still certainly on edge and wondering if they should put lockdown trades back on in light of the grim near-term transmission backdrop,” noted Adam Crisafulli, the founder of Vital Knowledge Media, on Monday morning, referring to the crop of mostly tech stocks (such as stay-at-home favorites Netflix, Zoom and Peloton) that have dominated the pandemic stock market but lagged in recent weeks in anticipation of widespread coronavirus vaccination.
A few stimulus plans are on the table as lawmakers look to tack on relief to a $1.4 trillion spending bill that’s currently due before this weekend. But lawmakers have been unable to agree on key issues, such as federal relief for state and local governments. In a Tuesday interview on CNBCâ€™s Squawk Box, Warren Buffett urged lawmakers to act quickly to provide emergency relief for small businesses, suggesting that millions of them have become “collateral damageâ€ in the governmentâ€™s efforts to control the pandemic’s spread through restrictions on economic activity, including lockdown orders.Â
What To Watch For
Big earnings later in the week include Rite Aid, Accenture and FedEx on Thursday, as well as Carnival Cruise Line, Nike and Olive Garden-parent Darden Restaurants on Friday.