Stocks Rise as Reopenings Continue Smoothly — Banks Lead the Way

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Stocks rose Tuesday as re-openings across the country continue at their slow pace. Coronavirus cases, meanwhile, have not exhibited a meaningful uptick. 

The S&P 500 was up as much as 0.29%, with the Nasdaq down a tick, as growth tech stocks take a breather after having outperformed for much of April and some of May. The 10 Year Treasury yield rose to 0.68%. Yields rise as prices fall. 

States across the country continue to reopen. Florida is reopening restaurants and New Jersey, one of the hardest hit states, has continued to slowly reopen. This comes without a meaningful increase in virus cases, the market’s biggest fear at present. 

And the markets biggest driver currently: successful re-openings. 

"So far, investors remain focused on global business reopening, the fact that the number of new Covid cases remains stable as economies restart operating and of course, the massive fiscal and monetary support from central banks and governments,” wrote Ipek Ozkardeskaya, senior analyst at Swissquote Bank in emailed remarks to reporters. 

Bank stocks lead the way Tuesday, with the Invesco KBW Bank etf  (KBWB) - Get Report 1.9%. The yield curve, in May, expanded, companies by high levels of new corporate debt issuance, highlighting stabilizing economic demand as monetary and fiscal stimulus works through the system. The bank index is up 35% since March 23, the bear market low, alongside the S&P 500’s gains in that time of 36%. JPMorgan  (JPM) - Get Report., widely viewed the best quality bank in the U.S., has only risen 26% since the March 23 low, while more yield curve sensitive banks like Bank of America  (BAC) - Get Report or smaller banks are up 40%. 

For an extended period, banks were drastic under-performers, as was value against growth, a trend that has also reversed itself. That’s a sign of strong risk sentiment and cyclical bullishness. The S&P 500 Equal-Weight Consumer Discretionary Index rose 0.62% Tuesday. 

The risk-on market comes as riots in response to the tragic killing of George Floyd destroy businesses around the country. Monday, President Trump threatened military use, as riots continued in the evening. Some see the riots as a potential risk to the economic recovery and reopening. 

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