Tesla Turns Ten

By Nicholas Jasinski |  Monday, June 29

Up Day. Stocks enjoyed a broad rally today, after selling off late last week as investors considered record coronavirus cases in the U.S., which had begun affecting the reopening plans of several states and businesses.

Those concerns took a back seat today. Trading had a decidedly risk-on slant to it, with economically sensitive small-caps leading larger companies. The industrials, materials, and consumer discretionary sectors were the best performers in the S&P 500, while technology and health-care shares lagged behind.

All 11 sectors ended higher on the day, and the index closed up 1.5%. A huge 14.4% gain for Boeing stock sent the Dow Jones Industrial Average up 2.3%, while the Nasdaq Composite gained 1.2%. The Russell 2000 rose 3.1%.

Boeing stock jumped after the Federal Aviation Administration said the plane manufacturer can begin test flights of its grounded 737 MAX. The jets have been forbidden from flying for more than 15 months, after two fatal crashes. Boeing's rise today helped boost stocks of other industrial firms in its supply chain, as well as airlines that fly the MAX in their fleets. 

Coronavirus case growth slowed slightly over the weekend in multiple hotspot states, including Arizona and Florida, but it's not an all-clear signal. The trend is still in the wrong direction, and test-site reporting on the weekends can be spottier than during the week. California, Florida, and Texas have all reversed some reopening measures, reimposing restrictions on bars, public gatherings, and other parts of the economy that had been lifted in recent weeks.

Citing the growing outbreaks in other states, the governors of New York and New Jersey both said they were reconsidering some planned reopening steps, including allowing indoor dining at restaurants. It underlines the long road to recovery for in-person dependent aspects of industries like travel, leisure, and entertainment—even in areas without growing outbreaks.

Outside the U.S., other countries similarly responded to outbreaks with local lockdowns. Officials grappled with outbreaks in Leicester, U.K.; Zurich, Switzerland; Melbourne, Australia; and Beijing, where authorities reportedly put nearly 500,000 people into lockdown on Sunday.

The economy continues to rapidly rebound from its lows of March and April, but the past two weeks have shown just how long it will take for a full recovery to take hold. Until a widely distributable Covid-19 vaccine is available, entire industries will remain impaired and rolling lockdowns will be a part of life. That's a recipe for a volatile and overall sideways market until the grounds for greater optimism—or pessimism—take precedence.