Jakarta, CNBC Indonesia – The United States (US) stock market opened swinging into the red zone on Tuesday (3/8/2021), following the decline in world crude oil prices.
The Dow Jones Industrial Average jumped 64.7 points (+0.19%) at 08:30 local time (20:30 GMT) but after 20 minutes it reversed to minus 66 points (+0.19%) to 34,772.12. The S&P 500 slipped 1 point (-0.02%) to 4,386.15.
The Nasdaq grew 23.9 points (+0.16%) to 14,704.98 after Tesla shares rose 1% at the open. Meanwhile, the price of West Texas Intermediate (WTI) crude oil futures weakened to penetrate below the psychological level of US$ 70 per barrel.
Yield (yield) US government bonds tenor 10 years-which became the benchmark in the market-moved steady today, indicating that investors’ concerns are easing so they sell risk-less assets (safe haven) the. Bond yields move in the opposite direction of price.
On Monday, the yield fell 8 basis points (bp) to 1.15% after the release of data on the US manufacturing sector which expanded at a slower pace in July. In addition, the spread of the delta variant of the Covid-19 virus has triggered investor concerns.
New cases in the US rose to an average of 72,790 per day over the past week. According to data from the Centers for Disease Control and Prevention (CDC), that figure surpassed its highest level last summer.
As a result, the Dow Jones on Monday closed 0.28% (97.31 points) to 34,838.16 and the S&P 500 fell 8.1 points (-0.18%) to 4,387.16. In contrast, the Nasdaq advanced 8.4 points (+0.06%) to 14,681.07 as quarantines during the pandemic benefited tech stocks.
However, those concerns eased somewhat after the CDC announced that vaccinations had reached 70% of the US population. Therefore, cyclical stocks that have benefited from the economic recovery-such as airline stocks-returned higher.
“This delta variant of the virus is spreading rapidly in the US and a slight decline in activity is inevitable… But the potential for a slowdown should no longer exist,” said Solita Marcelli, UBS Chief Investment Officer, in a research report quoted CNBC International.
Investors are also monitoring the progress of the finalization of the infrastructure stimulus law, which is targeted to pass before August 9. The stimulus will include an additional US$ 550 billion in spending in the next 5 years, or greater than the previous agreement of US$ 450 billion.
As of Friday last week, 88% of the S&P 500 index constituents (which have released their balance sheets) scored above-estimated net income, with an average net profit growth of 85.1 percent, the best since 2008.
CNBC INDONESIA RESEARCH TEAM
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