Stocks rose for a second straight day Tuesday, as the White House promises more Coronavirus testing capability throughout the country. Leading the market higher has been cyclical sectors, rather than big tech as earnings roll in.
All three major U.S. indices rose, with the S&P 500 up as much as 1.5%. The 10 year treasury yield slipped to 0.64%. Yields fall as prices rise.
The White House said Tuesday that it will be able to comfortably get testing to 2% of residents in all states, another feather in the cap of market bulls who say the virus will soon be quelled. This comes after heavy news flow showing many states in the U.S. and countries around the globe are slowly reopening their economies.
This enables a more constructive viewpoint on the consumer, which has been decimated by lockdowns and layoffs. Some on Wall Street now expect a better consumer than feared, especially as monetary and fiscal stimulus are working through the system.
The rally Tuesday was lead by cyclical sectors, like consumer discretionary. Starbucks (SBUX) - Get Report and McDonalds (MCD) - Get Report rose 1.9% and 1.8%, respectively. Banks kept rising as well. McDonald’s and Starbucks both have earnings upcoming and if Chipotle (CMG) - Get Report was any indication, these stocks may have some upside post-earnings.
In the past few weeks, it was big tech leading the market, which was flat to down n most sectors. But Amazon (AMZN) - Get Report, Apple (AAPL) - Get Report, Google (GOOGL) - Get Report and Facebook (FB) - Get Report, having raced giver of late, were trailing the market Tuesday into earnings. If earnings and guidance meet or beat expectations, the market could enjoy more leadership from the group.
Even as many strategists look for a pullback in stocks, the S&P 500 has gained 2.75% this week.