Monday’s Stock Market Open: US Equities Modestly Higher As EU Leaders Seek To Reach Recovery Fund Deal

U.S. stocks opened slightly higher on Monday as traders awaited a deal on Europe’s recovery fund while watching COVID-19 data.

The Dow Jones Industrial Average rose 12.48 points to 26,684.43, while the S&P 500 edged up 2.72 points to 3,227.45 and the Nasdaq Composite Index advanced 38.31 points to 10,541.50.

European Union leaders have yet to reach a deal on a 750-billion-euro ($858 billion) COVID-19 recovery fund as a meeting stretches into a fourth day in Brussels on Monday.

“Our base case is a [EU] deal is done by the end of the month, but I still think [Monday] is possible,” said James McCormick, global head of desk strategy at NatWest Markets. “The euro’s broad-based rally was a big macro story last week and it clearly reflected a growing optimism around eventual passage of the recovery fund.”

Chevron (CVX) said it agreed to buy Noble Energy (NBL) in an all-stock transaction valued at $5 billion.

The U.S. reported almost 72,000 new cases of Covid-19 on Saturday, the second straight day of more than 70,000 new infections -- Florida and Texas each confirmed more than 10,000 new cases Saturday.

Los Angeles Mayor Eric Garcetti warned he may issue another stay-at-home order for the city.

“The residents here [in Florida] are terrified and I’m terrified, for the first time in my career because there’s a lack of leadership,” said Democratic Florida Rep. Donna Shalala. “It’s terrible. We have community spread, which means the virus is out of control. In my district, it’s low-income minorities: Hispanics and African-Americans, who are forced to go back to work for economic reasons and because their employers demanded they go back to work.”

Shalala added: “We need to close down in Florida. Our economy will not come back until we meet this virus at its head and bring it down.”

The U.S. now has a total of 3.66 million Covid-19 cases, the highest figure in the world, with nearly 140,000 deaths.

“All the talk about a rotation out of technology [stocks] and into more ‘value’ oriented areas, will grow in the coming weeks,” said Douglas Busch, founder of ChartSmarter. “if we lose technologies leadership in a meaningful way, I think it will adversely affect the overall market. If the [tech] sector can just take a rest, and keep in the middle of the pack akin to a smart jockey that has a lot of horse under him in a thoroughbred race, then it will likely see a surge again into the fall.”

Some traders are hoping lawmakers come up with another large stimulus package.

“There is a lot of uncertainty about the size and shape of the next bill, particularly on the consumer side,” said Aneta Markowska, chief financial economist at Jefferies. “We believe consensus expects a roughly $1-$1.5 [trillion] package, so if the draft comes in on the high-end of that range, it would be seen as a positive surprise. In light of the deteriorating growth momentum, it is highly unlikely that Republicans under-deliver, which means that risks are skewed to the high side.”

“Our base case remains for the economic recovery to continue, but for the deep V rebound evident in much recent data to give way to a slower bumpier recovery going forward,” said Shane Oliver, head of investment strategy at AMP Capital Investors Ltd. “Shares are still vulnerable to a further correction or consolidation, with renewed lockdowns and the U.S. presidential election being the main risks.”

Overnight in Asia markets finished mixed, as China’s Shanghai Composite index jumped 3.11%; Japan’s Nikkei-225 edged up 0.09%; and Hong Kong’s Hang Seng Exchange slipped 0.12%.

In Europe markets traded mixed, as Britain’s FTSE-100 slipped 0.3%, while France’s CAC-40 edged up 0.16% and Germany’s DAX climbed 0.57%.

Crude oil futures fell 0.74% at $40.29 per barrel, Brent crude tumbled 0.76% at $42.81. Gold futures rose 0.45%.