Stocks rose in volatile trading Monday as Wall Street cheered news on Boeing and traders shrugged off the latest surge in coronavirus cases.
The Dow Jones Industrial Average traded 352 points, or 1.4%. The S&P 500 was up 0.7% while the Nasdaq Composite gained 0.3%.
Shares of Dow-member Boeing rose 5.5% as certification flights for the Boeing 737 Max were set to begin Monday. The test is seen by investors as a critical step in Boeing’s worst-ever corporate crisis, which began in March 2019 after two crashes in five months killed 346 people.
Investors bet on select stocks on hopes most state economies will continue to reopen even as some hotspots pop up. Southwest Airlines jumped after Goldman Sachs upgraded the shares to buy from sell. Southwest gained 5.1% following the upgrade. Shares of retailer Gap and Kohl’s rose 4% and 5%, respectively.
Futures contracts had initially pointed to a decline on Monday after data compiled by Johns Hopkins University showed more than 2.5 million Covid-19 cases have been confirmed in the U.S. On Friday alone, there were 45,255 additional cases were reported, bringing the country’s seven-day average to more than 41% from the prior week.
On Saturday, Florida reported a one-day record of cases of 9,636. The state reported an additional 8,577 on Sunday. Those figures were released after Florida once again banned drinking at bars on Friday. Texas — another state that has seen record spikes in coronavirus infections — rolled back on Friday some of its reopening measures.
But some, such as Tom Lee of Fundstrat Global Advisors, say they’re taking solace in the fact that the acceleration in infection numbers is not yet leading to a marked rise in fatalities.
“While there were many alarming COVID-19 ‘headlines’ over the weekend, noting ‘record case’ numbers, daily US deaths attributed to COVID-19 fell to a new low of 253,” Lee said in an email to clients.
“And while many are inclined to become ‘full blown’ bearish again, we think the divergence in healthcare in COVID-19 (cases vs deaths) and the trajectories mirroring NYC near its peak tells us” we may be close to the point when cases begin to slow, he added.
Facebook stock fell 2.8% on Monday as more companies said they will pause advertising on its platforms. Since Friday, Starbucks, Coca Cola and Guinness-parent Diageo all announced they will halt advertising on social media.
The move is seen as part of a broader effort among a growing number of companies to force social media platforms to crack down on hate speech and disinformation on their sites and apps. Twitter slipped 1.8% in a similar move.
The major averages posted their second weekly declines in three weeks on Friday. The Dow dropped 3.3% last week while the S&P 500 lost 2.9%. The Nasdaq Composite fell 1.9% last week. On Friday, the Dow dropped more than 700 points while the S&P 500 and Nasdaq each fell over 2.4%.
“The bearish argument for the current market is breadth has not strengthened during this period of consolidation,” said Andrew Thrasher, founder of Thrasher Analytics, in a note. “That’s discouraging as more stocks have broken down along with the index.”
Thrasher noted 3,150 will be a key level to watch for investors. “I’m less interested in risky assets until we get back to that level,” he said.
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