Strong oil shares boost Dow as Nasdaq retreats from record

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The Dow and the S&P 500 moved higher on Tuesday lifted by hopes the US Congress can reach an agreement to provide more stimulus to the economy.
The 11 Wall St door of the New York Stock Exchange in New York City. PHOTO: REUTERS

NEW YORK (AFP) - Shares of banks and petroleum-linked companies rocketed higher on Tuesday (July 21), lifting the Dow even as the Nasdaq retreated from its record in the prior session.

Dow members Exxon Mobil and Chevron jumped 7.1 per cent and 5.1 per cent respectively as oil prices climbed to their highest level in four months following agreement of a massive European stimulus plan.

The blue-chip index ended at 26,840.40, up 0.6 per cent.

The broad-based S&P 500 added 0.2 per cent at 3,257.30, while the tech-rich Nasdaq Composite Index shed 0.8 per cent to 10,680.36, pulling back from Monday's record close.

Quincy Krosby, chief market strategist at Prudential Financial, said the pullback in Nasdaq was probably due to profit taking.

Investors are hopeful that some of the states with bad coronavirus outbreaks may be leveling off and that lawmakers in Washington will approve another round of stimulus, Krosby said.

"The package would help cushion the continued downside of the virus on the economy," she said.

Banking shares joined energy in leading the market, with JPMorgan Chase winning 2.2 per cent and Bank of American and Citigroup gaining more than three percent.

Coca-Cola rose 2.3 per cent after reporting better-than-expected profits, even though earnings slid 32 per cent to US$1.8 billion (S$2.4 billion).

The soda giant did not restore a projection in its second-quarter earnings statement, a sign of continued uncertainty as large markets including the United States continue to battle Covid-19 outbreaks.

Another Dow member, Boeing, gained 2.3 per cent as the Federal Aviation Administration said it would issue a proposed airworthiness directive for the 737 Max, which has been grounded since March 2019 following two deadly crashes.

The FAA statement moves the Max a step further on the recertification path after the agency on July 1 completed test flights on the plane.

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