The S&P 500 and the Nasdaq hit all-time closing highs on Tuesday, but a drop in Apple stock capped gains from positive developments in U.S.-China trade and fresh progress in the medical battle against the coronavirus pandemic.
The Dow, which has yet to reclaim its February high, ended the session lower. The TSX ended almost flat, even as oil prices spiked on an approaching hurricane in the Gulf of Mexico where many oil production facilities are located, and as Bank of Montreal rallied more than 5% on an earnings beat.
Apple Inc weighed heaviest on all three U.S. indexes, its stock retreating days ahead of its 4-to-1 stock split.
That split, which will reduce Apple’s weight in the Dow, prompted a reshuffle in the blue-chip industrial average, with Salesforce.com replacing Exxon Mobil Corp, Amgen Inc taking Pfizer Inc’s spot, and Raytheon Technologies Corp ousted by Honeywell International Inc .
“These changes reflect what has occurred in the overall business environment,” said Robert Pavlik, chief investment strategist at SlateStone Wealth LLC in New York.
“But if (the Dow) were a portfolio drafted by a portfolio manager, the client would have fired the portfolio manager,” Pavlik added.
The S&P/TSX Composite Index closed down 9.16 points, or 0.06%, at 16,617.48. Despite a rally in oil prices, energy stocks only managed a 0.09% advance.
The TSX financials sector gained 0.40% as the big bank earnings season got underway.
Bank of Montreal reported better-than-expected third-quarter profit, driven by higher revenue from wealth management and capital markets even as the bank set aside more than $1-billion to cover potential loan losses. Shares closed up 5.70%.
But Bank of Nova Scotia missed Street expectations as its third-quarter profit fell 34 per cent. It set aside nearly $2.2-billion to cover potential loan losses, wiping out earnings from its international banking division and overshadowing strong results from capital markets. Its shares closed down 0.67%.
Northern Dynasty Mines again led decliners on the TSX, dropping a further 35.29% on rising doubts the company can clear regulatory hurdles for its Pebble Mine project in Alaska.
The U.S. Army Corps of Engineers on Monday gave Northern Dynasty 90 days to explain how it would offset “unavoidable adverse impacts” to more than 3,200 acres (1,295 hectares) of wetlands were the mine to be developed.
Late on Monday, Alaska’s U.S. Senators Dan Sullivan and Lisa Murkowski, both Republicans, came out against the mine, saying it could cause significant damage to the state’s Bristol Bay region popular for fishing and hunting. Murkowski is the powerful chair of the Senate Energy and Natural Resources Committee and her opposition is likely to carry weight across U.S. federal agencies.
Crude oil prices rose to a five-month high on Tuesday as U.S. producers shut most offshore output in the Gulf of Mexico ahead of Hurricane Laura even as rising coronavirus cases in Asia and Europe capped gains.
Brent futures rose 73 cents, or 1.6%, to settle at $45.86 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 73 cents, or 1.7%, to settle at $43.35.
That was the highest closes for both benchmarks since March 5, the day before Saudi Arabia and Russia failed to agree on a new plan to cut output and about a week before the World Health Organization declared COVID-19 a pandemic.
U.S. producers cut crude output ahead of Hurricane Laura at a rate approaching the level of 2005′s Hurricane Katrina and also halted most oil refining along the Texas/Louisiana coast.
Laura is expected to strengthen into a major hurricane with 115 mile per hour (185 kph) winds before it strikes the coast near the Texas-Louisiana border early Thursday, according to the U.S. National Hurricane Center.
On Tuesday, producers had evacuated 310 offshore facilities and shut 1.56 million barrels per day (bpd) of crude output, 84% of Gulf of Mexico’s offshore production, near the 90% outage that Katrina brought 15 years ago.
Meanwhile, trade officials in Washington and Beijing reaffirmed their commitment to Phase One of a bilateral trade deal, but goodwill between the countries soured as China called a U.S. spy plane’s flight through a no-fly zone a “naked provocation.”
British drugmaker AstraZeneca has begun trials of its antibody-based drug for the treatment and prevention of COVID-19, the latest development in a global race to combat the pandemic.
On the economics front, the Conference Board’s Consumer Confidence index plunged to a 6-year low this month, while a report from the Commerce Department showed sales of new homes in July surged to a more than 13-1/2-year high.
“You have this dichotomy between what’s happening in the stock market and the economy,” Pavlik said. “They’re moving away from each other.”
“Wall Street believes in a year from now the economy is going to improve and it’s positioning itself to what it anticipates six months to a year from now.”
The Dow Jones Industrial Average fell 60.02 points, or 0.21%, to 28,248.44, the S&P 500 gained 12.34 points, or 0.36%, to 3,443.62 and the Nasdaq Composite added 86.75 points, or 0.76%, to 11,466.47.
Of the major sectors in the S&P 500, six ended the session higher, with communications services enjoying the largest percentage gain and energy falling the most.
American Airlines Group Inc dropped 2.2% after announcing it would layoff 19,000 employees in October unless the government extends airline payroll aid.
Electronics chain Best Buy Inc beat analysts’ second-quarter sales expectations but warned of a current quarter slowdown following the work-from-home demand surge. Its shares fell 4.0%.
Medtronic rose 2.5% after the medical device maker’s quarterly profit beat consensus. The company said a revival in elective surgeries was boosting demand.
Salesforce.com jumped over 7% in extended trading after posting results.
Advancing issues outnumbered declining ones on the NYSE by a 1.05-to-1 ratio; on Nasdaq, a 1.48-to-1 ratio favored advancers.
The S&P 500 posted 29 new 52-week highs and no new lows; the Nasdaq Composite recorded 58 new highs and 24 new lows.
Volume on U.S. exchanges was 8.30 billion shares, compared with the 9.48 billion average over the last 20 trading days.
Reuters, Globe staff
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