Stocks Climb on Last Day of Best Quarter Since ‘98: Markets Wrap

(Bloomberg) — U.S. stocks climbed on the final day of the best quarter since 1998 as traders assessed better-than-estimated consumer confidence data amid concern over new coronavirus infections.

After bottoming in March, the S&P 500 surged as much as 44% before the rally cooled down in the second half of June. The gauge advanced Tuesday as a report showed the Conference Board’s index had its biggest one-month gain since 2011. Uber Technologies Inc. jumped on a news report that it’s in talks to buy Postmates Inc. The Dow Jones Industrial Average underperformed after one of Boeing Co.’s largest European customers scrapped a $10.6 billion purchase deal. Both Treasuries and the dollar fell, while gold traded near $1,800 an ounce.

Optimism has been shaken as accelerating virus cases threaten to set back reopenings and, with them, any economic progress. Infectious-disease expert Anthony Fauci said he’s “quite concerned” about the increase of Covid-19 cases in states such as Florida, Texas, Arizona and California. The Federal Reserve is preparing for the possibility of a second wave of infections, and lawmakers are likely to question Chairman Jerome Powell about a resurgence of the virus when he appears before the House Financial Services Committee with Treasury Secretary Steven Mnuchin at 12:30 p.m. Washington time.

“The downside has become more limited given how many investors missed the rebound, how many remain bearish and how much cash has been sitting on the sidelines,” wrote Esty Dwek, head of global market strategy for Natixis Investment Managers. “Coupled with abundant stimulus measures and liquidity, corrections are likely to be bought. That said, we remain prudent and believe it is too early to add a lot of risk to portfolios.”

The Nasdaq Composite Index is heading toward its best quarter since 2001, with a 30% gain, compared with a 19% rally for the S&P 500. The Dow Average has climbed 17% in the span, and was set for its biggest quarterly advance since 1998. Optimism for reopenings and economic recovery helped consumer-discretionary stocks surge the most ever, while utilities underperformed.

In terms of what’s ahead, “stocks moved into a second phase of recovery in June, where slower and choppier gains are more likely to occur as Fed-driven valuation expansion gives way to economic and earnings progress as the primary driver of returns,” said Bloomberg Intelligence’s Gina Martin Adams.

Traders also monitored news that Hong Kong for the first time banned its biggest annual protest march, a decision attributed to outbreak-control measures that comes after Chinese lawmakers approved sweeping national security legislation for the former British colony.

Here are some key events coming up:

The monthly U.S. jobs report will be released on Thursday.

These are some of the main moves in markets:

Stocks

The S&P 500 Index climbed 1% as of 12:25 p.m. New York time.The Dow Jones Industrial Average gained 0.3%.The Nasdaq Composite Index jumped 1.4%.The Stoxx Europe 600 Index was little changed.The MSCI Asia Pacific Index advanced 0.7%.

Currencies

The Bloomberg Dollar Spot Index declined 0.1%.The euro was little changed at $1.1241.The Japanese yen depreciated 0.2% to 107.83 per dollar.

Bonds

The yield on 10-year Treasuries climbed one basis point to 0.63%.Germany’s 10-year yield gained less than one basis point to -0.47%.Britain’s 10-year yield was unchanged at 0.163%.

Commodities

The Bloomberg Commodity Index gained 0.5%.West Texas Intermediate crude dipped 0.3% to $39.59 a barrel.Gold increased 1% to $1,798.90 an ounce.

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