Monday’s Stock Market Close: US Equities Finish Mixed In Volatile Trading Session, Erasing Earlier Gains

U.S. stocks were mixed on Monday as traders examined a surge in coronavirus cases in Florida, hopes for a covid-19 vaccine, the start of second quarter earnings season and a big chipmaker merger.

The Dow Jones Industrial Average edged up 10.5 points to 26,085.80, while the S&P 500 dropped 29.82 points to 3,155.22 and the Nasdaq Composite Index tumbled 226.6 points to 10,390.84.

Monday’s volume on the New York Stock Exchange totaled 4.16 billion shares with 1,119 issues advancing, 119 setting new highs, and 1,885 declining, with six stocks setting new lows .

Active movers were led by (NIO), Vaxart Inc. (VXRT) and Equillium Inc. (EQ).

The state of Florida recorded 15,299 new coronavirus cases on Sunday, making it the biggest one-day total for any state since the pandemic emerged in March. The Sunshine State now has almost 270,000 covid-19 cases, more than some major countries.

On the whole, the U.S. now has more than 3 million cases.

“COVID remains a huge problem [with] cases, hospitalizations, and fatalities all climbing,” said Vital Knowledge founder Adam Crisafulli. “The market continues to absorb all this information relatively well and this seems to be a function of vaccine hopes, lower fatality rates [versus] [March]/April, the avoidance of wholesale lockdowns, and the lack of a resurgence in the Northeast [especially in New York City].”

Pfizer (PFE) and German biotech BioNTech (BNTX) received fast-track designation by the Food and Drug Administration for two of the their four covid-19 vaccine candidates.

On Monday morning, semiconductor maker Analog Devices (ADI) said it agreed to buy Maxim Integrated Products (MXIM) in a $21 billion stock deal.

“Every time there has been a positive announcement regarding a vaccine, it’s had a halo effect on the market,” said Quincy Krosby, chief market strategist at Prudential Financial. “This is a market that has been desperate to see the other side of this, and the only way it can do that, is watching those announcements from the companies moving towards a vaccine.”

As second quarter earnings season commences, Refinitiv said it expects corporate profits to plunge by 44% in the quarter.

“We think earnings are likely to recover in the second half of the year and excess liquidity will continue to support risk assets,” said Julie Fox, managing director at UBS Private Wealth Management. “We see further potential in global equities and think there’s some upside in segments of the market that have underperformed during the crisis.”

The Organization of the Petroleum Exporting Countries and Russia will meet this week and may ease back production cuts.

Nasdaq stocks traded wildly, giving back some recent gains in the tech rally.

“No sentient human could look at some of the super-cap tech stocks and say the latest move wasn’t anything other than a momentum-driven melt-up rally -- this isn’t to say the gains aren’t real and anyone recommending a more cautious view has obviously been wrong, but investors need to realize ‘growth’ right now is like a game of musical chairs with 100 players and 3 chairs,” said Crisafulli of Vital Knowledge.

“The overall [stock market] rally is still very narrow...and several of the high-flying mega-cap stocks are becoming overbought (and more over-valued),” said Matthew Maley, chief market strategist at Miller Tabak. “Therefore, we have to wait to see if the key resistance level on the S&P is indeed broken to the upside before we can confirm that another rally leg in the broad stock market has begun.”

Overnight in Asia markets finished higher, as China’s Shanghai Composite index rose 1.77%; Japan’s Nikkei-225 gained 2.22%; and Hong Kong’s Hang Seng exchange edged up 0.17%.

In Europe markets finished higher, as Britain’s FTSE-100 gained 1.33%, while France’s CAC-40 climbed 1.73% and Germany’s DAX rose 1.32%.

Crude oil futures fell 2.29% at $39.62 per barrel, Brent crude dropped 1.03% at $42.28. Gold futures edged up 0.08%.

The yield on the 10-year Treasury rose 1.11% to 0.64% while yield on the 30-year Treasury gained 0.83% to 1.337%.