Nasdaq climbs to record as investors look past coronavirus hit on supply chains


Stocks traded higher on Monday as Wall Street investors pushed past concerns about the coronavirus outbreak’s potential disruption to supply chains, partly due to expectations of continued monetary support from the Federal Reserve.

What are major indexes doing?

The Dow Jones Industrial Average

DJIA, +0.26%

rose 77 points to 29,179, a gain of 0.3%. The S&P 500 index

SPX, +0.35%

advanced 11 points, or 0.3%, to 3,339. The Nasdaq Composite Index

COMP, +0.62%

climbed 58 points, or 0.6%, to 9,578, setting a new intraday record.

Both the S&P 500 and Dow Jones Industrial Average are less than a percentage point away from their previous record closes set last Thursday.

What’s driving the market?

Stocks bounced back last week from an end-of-January selloff as worries about the spread of the coronavirus outbreak that emerged in China took a back seat. The buoyant mood extended on Monday even as investors kept an eye on developments surrounding the spread of the illness in the country and beyond.

Expectations for the Federal Reserve to prop up the economy with easy financial conditions if the coronavirus spills over into the U.S., also helped to support stocks. Investors say a continuation of ultra-loose monetary policy could explain the disconnect between depressed long-dated bond yields, a sign that investors are piling into haven assets, and records in major equity benchmarks.

“Coronavirus fears remain at the top of investors’ minds,” wrote Arnim Holzer, macro strategist for EAB Investment Group, underscoring that bonds seem to be confirming those concerns more than equities. “The Fed’s liquidity support can help to support valuations,” Holzer said of stock prices. But added that “ultimately muted Asian GDP growth and earnings expectations” will be important to watch.

The 10-year U.S. Treasury note

TMUBMUSD10Y, -1.63%

yield traded lower by about 1.8 basis points to 1.559%. Bond prices move inversely to yields.

Chinese factories officially started to reopen on Monday, but local government efforts to limit the spread of the virus has led some businesses to stay closed. A prolonged closure could exacerbate the nation’s slowdown and upend global supply chains that rely on Chinese manufacturers to keep retailers stocked.

See: Investors brace for coronavirus shock as China factories poised to reopen Monday

China’s health ministry on Monday said another 3,062 cases had been reported over the previous 24 hours, raising the mainland’s total to 40,171. The death toll grew by 97 to 908, surpassing the 774 attributed to the Severe Acute Respiratory Syndrome, or SARS, a 2003 viral outbreak that originated in China.

Meanwhile, the director-general of the World Health Organization warned Sunday that countries outside of China should be prepared for the spread of the coronavirus to accelerate.

Read: Why ‘buy the dip’ is the stock market’s default setting — and what it would take for that to change

Earnings season, meanwhile, moves into it final stretch this week. With nearly two-thirds of S&P 500 companies having reported through Friday, FactSet now expects profits to grow in the fourth quarter.

Earnings Watch: The earnings recession is expected to end after some big profit surprises

Which companies are in focus?
How are other markets trading?

Oil prices declined. The price of a barrel of West Texas Intermediate crude for March delivery

CLH20, -0.99%

fell 17 cents, or 0.3% to $50.15 on the New York Mercantile Exchange. In precious metals, gold for April delivery

GCJ20, +0.29%

rose $4.1 to $1,577.50 an ounce on Comex.

The U.S. dollar

DXY, +0.18%

rose 0.1% relative to a basket of its six major trading peers.

In Europe, stocks edged higher Monday, with the Stoxx Europe 600

SXXP, +0.07%

up less than 0.1%. In Asia overnight, stocks traded mixed. The China CSI 300

000300, +0.41%

was up 0.4%, while Japan’s Nikkei 225 lost 0.6%.

Source : MTV