Record US Coronavirus Cases Reported As Q2 Earnings Season Begins

Over the weekend the surge in COVID-19 cases in the US continued to escalate, with Florida setting a record for the most new cases in a single day from any state. More than 15,000 new cases were reported on Saturday in the sunshine state, with the positivity rate of tests — a key measure of how fast the virus is spreading — reaching 19.6% according to Johns Hopkins University. Despite the pandemic progress, all three major US stock indices posted gains on Friday ahead of the weekend, with investor sentiment boosted by a variety of updates on COVID-19 vaccine and treatment hopes. US futures also point towards a firmer open today, currently trading up 0.5%.

The harrowing numbers from Florida and other states arrive as Q2 earnings season kicks into gear and the race for the presidency heats up. The big banks are first up reporting earnings this week, with JPMorgan (JPM), Citi (C), Wells Fargo (WFC), Goldman Sachs (GS) and more all delivering updates, alongside some of corporate America’s other giants, such as Microsoft (MSFT), Pepsico (PEP) and Delta Airlines (DAL). Earnings reports for Q2 carry a great deal more uncertainty than Q1, given that lockdowns applied throughout the quarter, and the majority of companies have thrown out their financial guidance.

In the presidential race, President Trump continues to fall behind Joe Biden, but election watchers are cautious given that polling in 2016 indicated a comfortable lead for Hillary Clinton a similar distance out. Over the weekend, a new poll showed Biden leading Trump by five percentage points in Texas, a state that has gone Republican in every presidential election since 1980. 

‘Few concrete developments’ behind the recent stock rally, traders say

Although it lagged slightly on Friday compared to the other major stock indices, the Nasdaq Composite continued to race ahead last week. The tech-heavy index gained 4% over the course of the week, versus 1.8% for the S&P 500 and 1% for the Dow Jones Industrial Average. Friday ran against the grain, with the energy and financial sectors — two of the hardest hit in 2020 — leading the way in the S&P. JPMorgan and Goldman Sachs led the Dow, closing 5.5% and 4.4% higher respectively. Traders at T. Rowe Price said in a Friday note that vaccine hopes seemed to support share price gains last week, but “few concrete developments appeared to drive the rally”.

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