Dow Soars After New York Hits Remarkable Virus Milestone

New York City recorded zero new virus-related deaths on Sunday for the first time in four months. The city proves containment (and a return to economic activity) is possible.
For the first time since the pandemic outbreak, New York City officials reported no confirmed deaths for the first time in four months. | Source: REUTERS/Lucas Jackson
  • The Dow Jones Industrial Average (DJIA) marched higher on Monday.
  • New York hit a huge milestone as the city reported zero virus deaths for the first time in four months.
  • Traders brace themselves for the most uncertain earnings season in modern history this week.

Optimism returned to Wall Street on Monday as the U.S. stock market marched steadily higher. The Dow Jones Industrial Average (DJIA) rose more than 200 points at the opening bell.

New York traders have good reason to be cheerful. The city reported zero new virus deaths on Sunday – a huge milestone in New York’s containment efforts.

New York virus cases
New York has been successful in containing virus cases, even as the city re-opens. Source: Johns Hopkins

The city’s achievement shows a glimpse into a future where economic activity can resume safely. Luciano Jannelli, head of investment strategy at Abu Dhabi Commercial Bank PJSC, explains why this will likely drive stocks higher. Specifically, tech stocks.

We are going to see a rebound, a normalization of economic activity over a twelve month horizon. And gradually buying into [tech stocks] still makes sense.

Jannelli said he’s a “gradual buyer” in the coming twelve months, but admits we could see a correction in the short-term.

The national picture remains bleak, with record daily cases in Florida this weekend. But it’s worth pointing out that U.S. stocks have broadly tracked the activity in New York throughout the entire pandemic.

Dow rips higher on Monday

The week opened with a bang as global stocks rallied across the board. The Dow ripped 241.77 points or 0.93% higher, following Asian and European markets higher.

As of 9:34 am ET, the DJIA was trading at 26,317.07.

dow jones chart today
The Dow Jones pumped higher on Monday. Source: Yahoo Finance

The S&P 500 was up 0.85% at 3,212.06, while the Nasdaq jumped 1.19% to 10,744.18.

The blistering Tesla rally continued to fuel the Nasdaq’s ascent. The stock launched another 10% higher to $1,704.58 in early trading.

New York proves containment is possible

The remarkable New York numbers show that the virus can be contained. The economy can resume its activity. This week, New York entered ‘phase three’ of its re-opening plan which includes nail salons and other small businesses. Indoor dining remains off-limits. City Hall spokeswoman Avery Cohen said:

In the absence of national leadership, our city has stepped up to show what it means to reopen safely.

As the financial capital of the world, traders have watched the outbreak closely in New York. There are optimistic signs elsewhere, too. Washington DC has recorded zero virus-related deaths for three-straight days.

New York became the epicenter of the pandemic outbreak in April. | Source: Kena Betancur/Getty Images/AFP

The New York milestone comes four months after the first virus-related death was recorded. Fatalities peaked in the city on April 7th at 597.

Dow Jones outlook: all eyes on earnings

Elsewhere this week, traders turn their attention to corporate earnings. This is lining up to be the most uncertain earnings season in modern history.

181 of S&P 500 companies have pulled their guidance, leaving investors in the dark. The spread between analyst estimates are now wider than ever.

Harry Curtis, a managing director at Instinet said investors have practically written off second-quarter earnings already.

Stock valuations really are now based on earnings power two years out.

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Nike disappointed investors last month with worse-than-expected earnings. The stock fell 6% in the two days that followed. FedEx surprised to the upside, triggering a 20% jump in the share price.

Safe to say, we’ll see some big moves in the coming month.

JP Morgan Chase, Goldman Sachs, and Netflix are among the first to report this week.

Stock market volatility ahead

The earnings picture is cloudy, but analysts mostly agree on one thing: volatility is coming.

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There are plenty of reasons to discount this rally, according to some analysts. Julie Fox, market head and managing director at UBS Private Wealth Management explained that earnings aren’t the only headwind.

We’re going to continue to see this volatility likely through to the end of the year due to the pandemic, the US-China tensions, the US presidential elections.

Despite the gloom, Fox told investors to “stay invested” through the big moves as there’s an opportunity for further gains yet. She’s looking at U.S. mid-caps and stocks geared towards re-opening. Ecommerce, fintech, healthcare, and digital transformation stocks should also perform well, she predicted.

Samburaj Das edited this article for CCN - Capital & Celeb News. If you see a breach of our Code of Ethics or find a factual, spelling, or grammar error, please contact us.

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