Nasdaq Sets New Record Closing High But Dow Ends The Day In The Red

While the Nasdaq and the S&P 500 moved notably higher over the course of the trading session on Wednesday, the Dow showed a lack of direction before closing in negative territory. The advance on the day lifted the tech-heavy Nasdaq to a new record closing high.

The Dow moved to the downside going into the close, ending the session down 77.91 points or 0.3 percent to 25,734.97. Meanwhile, the Nasdaq jumped 95.86 points or 1 percent to 10,154.63 and the S&P 500 climbed 15.57 points or 0.5 percent to 3,115.86.

The upward moves by the Nasdaq and S&P 500 came after drug giant Pfizer (PFE) and German biotech company BioNTech (BNTX) announced positive data from an early-stage human trial of a potential coronavirus vaccine.

The companies said the most advanced of four investigational vaccine candidates was generally well tolerated and produced neutralizing antibodies.

Pfizer, a Dow component, surged up by 3.2 percent on the news, but steep losses by Walgreens (WAG) and Exxon Mobil (XOM) weighed on the blue chip index.

Strong gains by Amazon (AMZN) and Netflix (NFLX) contributed to the advance by the Nasdaq, while FedEx (FDX) led the S&P 500 higher after reporting better than expected fiscal fourth quarter results.

Adding to the overall positive sentiment on Wall Street, the Institute for Supply Management released a report showing U.S. manufacturing activity unexpectedly expanded in the month of June.

The ISM said its purchasing managers index jumped to 52.6 in June from 43.1 in May, with a reading above 50 indicating an expansion in manufacturing activity.

Economists had expected the index to climb to 49.5, which have still indicated a modest contraction in manufacturing activity.

“As predicted, the growth cycle has returned after three straight months of COVID-19 disruptions,” said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee.

He added, “Demand, consumption and inputs are reaching parity and are positioned for a demand-driven expansion cycle as we enter the second half of the year.”

A separate report released by payroll processor ADP showed a significant increase in private sector employment in the month of June as well as a substantial upward revision to the data for May.

ADP said private sector employment jumped by 2.369 million jobs in June, which was below economist estimates for a spike of about 3.000 million jobs.

However, revised data showed private sector employment soared by 3.065 million jobs in May compared to the previously reported loss of 2.760 million jobs.

Sector News

Retail stocks showed a substantial move to the upside on the day, driving the Dow Jones U.S. Retail Index up by 2.3 percent to a new record closing high.

Significant strength was also visible among interest rate-sensitive utilities and commercial real estate stocks, with the Dow Jones Utility Average and the Dow Jones U.S. Real Estate Index jumping by 2.3 percent and 2.2 percent, respectively.

On the other hand, energy stocks saw considerable weakness on the day even though the price of crude oil for August delivery climbed $0.55 to $39.82 a barrel.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service plunged by 2.9 percent and the NYSE Arca Oil Index tumbled by 2.5 percent.

Banking stocks also moved sharply lower over the course of the session, dragging the KBW Bank Index down by 2.7 percent.

Housing, networking and semiconductor stocks also saw notable weakness on the day, partly offsetting the strength in the aforementioned sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan’s Nikkei 225 Index slid by 0.8 percent, while China’s Shanghai Composite Index jumped by 1.4 percent.

Meanwhile, the major European closed modestly lower following a choppy trading day. While the German DAX Index fell by 0.4 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index both edged down by 0.2 percent.

In the bond market, treasuries climbed off their worst levels but still closed in negative territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.9 basis points to 0.682 percent.

Looking Ahead

Trading on Thursday is likely to be driven by reaction to the Labor Department’s closely watched monthly employment report for June.

The report, which is expected to show another spike in employment in June, is likely to overshadow data on weekly jobless claims, the trade deficit and factory orders.

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