Before The Bell - The stock market, which continued its winning ways to start this week, with moderate improvement on Monday and Tuesday, began the middle session of the week on an uncertain note. However, after slight losses during the first few minutes of trading, the Dow Jones Industrial Average and the S&P 500 Index both climbed into the plus column and continued on the positive track through the lunch hour. The NASDAQ, up at the start of trading, would go back and forth between small gains and slight losses. By lunchtime, each composite was showing modest strength, though.

As to influences on trading, the housing sector received a dose of good news yesterday morning, as sales of existing homes surged during June, rising 21% for the month. That was the largest month-to-month increase on record and followed three straight months of sales declines due largely to the COVID-19 pandemic. Nevertheless, sales were still down some 11% year-over-year. Working against an even stronger showing by the stock market at midday were the rising tensions between the United States and China.

On another front, drug maker and Dow component Pfizer (PFE) saw its shares rise rather sharply after the Department of Health and Human Services announced that it had selected the company to provide 100 million doses of its COVID-19 vaccine candidate if it were to prove effective. The drug giant is partnering with a company based in Germany on this vaccine. Meantime, the stock market continued to amble higher as we moved into the early stages of the afternoon. Earnings, too, were front and center, and this will continue as the week winds down.

The market would falter a little as we moved further into the afternoon, with the Dow giving back its modest advance, while the NASDAQ fell back into the red. There was not much appetite to unload equities, however, so the selling was light. Helping stocks, all the while, were the shares of key homebuilders, which pressed higher on the good existing home sales news. Hopes for a stimulus package from the government also boosted stocks. Overall, the market seemed on hold awaiting some key earnings issuances after the close of trading.  

Even so, stocks would firm somewhat as we approached the end of trading on optimism about those earnings releases, with the Dow Industrials, for example, finishing ahead by a session-best 165 points, its first close above 27,000 in six weeks. Modest increases of 19 points and 26 points, respectively, would be tallied by the S&P 500 Index and the NASDAQ. Then, after the close, electric car maker Tesla (TSLA) reported its fourth straight quarterly profit and saw its stock jump some 5% in after-hours trading. Microsoft (MSFT), which also posted an earnings beat, eased back more than 2%.

After these reports and following the reasonably positive performance by the equity market yesterday, the futures, which were little changed in dealings after the close of trading last evening, now are pointing to a further uptick when stocks open this morning.  – Harvey S. Katz, CFA

At the time of this article’s writing, the author held positions in one or more of the companies mentioned.