- Stocks reversed opening losses to finish the day higher, with the Dow Jones outperforming the NASDAQ and S&P 500. Energy stocks were up more than 2%, leading the gains, while utility stocks were the biggest laggard. U.S. 10-year yields were little changed on the day after trading lower in the opening hours. International stocks continued to lag after key Asian indexes sold off during Monday's session. Bitcoin crossed the $39,000 for the first time in six weeks after surging more than 15%.
- The Federal Reserve Bank of Dallas released its monthly business activity index, which was in focus for investors today as the economy continues to be plagued by supply shortages and bottlenecks. Rising delta-variant cases could further delay a recovery in the global supply chain and keep prices elevated for some time. Even though coronavirus case counts have rebounded in recent weeks, governments seem less willing to enact economic and mobility restrictions at the levels seen in 2020. However, rising case counts could delay a full recovery in the labor market, as travel remains at least somewhat restricted.
- Strong earnings this season have offset any concerns over slowing growth for U.S. equity investors. Tesla is set to report earnings after the bell, and other large-cap names like Apple, Amazon, and Facebook will report earnings later this week. So far, roughly one quarter of S&P 500 companies have reported, with 88% of them posting better-than-estimated results. We think that strong corporate profit growth and accommodative monetary policy will continue to provide a positive backdrop for equities. Strong consumer demand is also set to drive further job gains and services spending, in our view, but a full recovery could still be a ways off as states grapple with the reopening timeline amid rising case counts.
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