MANHATTAN (CN) — As gold continues to steamroll ahead and investors await news from Congress on a stimulus proposal, markets recovered slightly Monday from last week’s sell-off.
At the closing bell, the Dow Jones Industrial Average gained 116 points, a 0.4% increase, while the S&P 500 gained about 0.75%. The Nasdaq recalled its previous winning streak earlier this month to gain 1.6% for the day.
Meanwhile, gold has continued its march upward. Last week, futures of the precious metal hit $1,900, while on Monday it rose to $1,931 per ounce, at one point hitting $1,941.
Monday had only a few economic indicators to scrutinize. For the second straight month, durable goods spending increased, according to data from the U.S. Census Bureau. New orders for durable goods in June rose to nearly $207 billion, a 7.3%, compared with $193 billion in May.
The increase shows the U.S. economy has recovered about half of what it had lost in March, but new orders are still down 16% overall from their February levels and core capital goods — which excludes transportation goods — remain 3% below their February level.
“The more modest 3.3% rise in core capital goods orders indicates that businesses are still hesitant as they navigate the highly uncertain economic environment,” Oren Klachkin, one of the lead U.S. economists at Oxford Economics, wrote in an investor’s note.
New orders of auto parts spiked almost 86% from May to June but are still down 10% year over year, while transportation equipment gained 20%. On the flip side, new orders of non-defense aircraft and parts fell 462% during that period.
“The July and August capital spending data will be more relevant for the markets because the economy was still in the reopening process in June,” wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group, adding that virus flare-ups last month likely influenced spending plans.
Investors now await news of a new stimulus package, a draft of which is rumored to be released later today by Republicans. According to White House officials, the $1 trillion package will include another round of stimulus checks, this time to the tune of $1,200, and will infuse the Paycheck Protection Program with additional funds.
According to a survey released Monday by the National Federation of Independent Business, nearly half of small businesses expect they will need additional financial support in the next six months. About three-quarters of those small businesses who received PPP loans have used their entire loan, the survey found.
The stimulus proposal also reportedly plans to ramp down unemployment benefits, doing away with the $600 weekly plus-up in favor of $200 per week on top of regular unemployment benefits.
Some Republicans had blamed the additional unemployment funds for keeping workers at home, saying employees had made more on unemployment than they did on the job. Democrats had called the $600 plus-up necessary and wanted it extended until January to keep the precarious economy from teetering backwards.
Current unemployment benefits will run out at the end of the week.
Later this week investors will be watching for additional earnings reports, most notably from 3M, Starbucks and Pfizer. The Federal Reserve also is meeting this week, with Chairman Jerome Powell scheduled to speak on Wednesday about the central bank’s key decisions moving forward.
“The Fed is stuck between the emergency actions of this past spring and the next steps to bolster the recovery that will come later this year,” University of Oregon economics professor Tim Duy said. “The most likely outcome for this week is no policy change but a dovish tone to the statement and the press conference.”
Some analysts are heartened by the apparent slowing of new cases in hard-hit states like Arizona and Florida.
According to data compiled by Johns Hopkins University, more than 16.3 million people have been infected by Covid-19 worldwide, while 650,000 have died. More than 4.2 million Americans have contracted coronavirus, while nearly 147,000 U.S. deaths have been attributed to the virus.
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