Stock market: Wall Street digests decrees from Donald Trump

Gold ends higher as China-U.S. tensions seen escalating; Silver rallies over 6%
August 11, 2020
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August 11, 2020

Stock market: Wall Street digests decrees from Donald Trump

MARKET REVIEW. Wall Street ended Monday’s session in broken order, digesting new stimulus measures decreed by Donald Trump over the weekend and closely following escalating Sino-US tensions.

The clues
In Toronto, the S & P / TSX ended the day with a gain of 61 points, or 0.37%, to 16,605 points.
On Wall Street, the S&P 500 Composite Index garnered 9 points, or 0.27%, at 3,360 points.
The flagship Dow Jones index jumped 357 points, or 1.3%, to 27,791 points.
The Nasdaq, for its part, fell 42 points, or 0.39%, to 10,968 points.

The context
According to Peter Cardillo of Spartan Capital Securities, the market “hopes that the economic recovery will accelerate” thanks to aid from the Federal Reserve and the US government.

On Saturday, Donald Trump signed four decrees, which provide for a wage freeze, an extended unemployment benefit of $ 400 per week, protections for tenants threatened with eviction and a postponement of the repayment of student loans.

These decisions, taken less than three months before the presidential election, however, risk being challenged in court since it is to Congress that the US constitution confers most of the country’s budgetary decisions.

The White House and the Democrats could also return to the negotiating table to find a compromise on these new aid measures.

In any case, they benefited on Monday cyclical stocks on the stock market, particularly sensitive to the environment and to the economic outlook: Nike (+ 3.49%), Boeing (+ 5.52%) and Caterpillar (+ 5.26%) , all members of the Dow Jones, soared.

These readjustments were made, according to several experts, to the detriment of major technology stocks, including Amazon (-0.61%), Netflix (-2.29%) or Facebook (-2.03%).
The renewed tensions between the United States and China also caught the attention of investors on Monday.

Beijing announced sanctions against 11 US officials, including Republican Senators Marco Rubio and Ted Cruz, in retaliation for similar moves by Washington against Chinese officials accused of undermining Hong Kong’s autonomy. The tone had already risen last week with Donald Trump’s threat to ban the popular Chinese mobile applications TikTok and WeChat in the United States, which had raised fears of retaliation by Beijing against American tech companies.

Kodak in free fall
Among today’s values, Eastman Kodak tumbled 27.89%. A loan of $ 765 million, which had been given to the famous photography group to help them get into the pharmacy, has been suspended. The American agency which had released the sum expressed concern on Friday about “recent allegations of irregularities”.

McDonald’s was down 0.23%. The American fast-food giant has launched a lawsuit against its former boss, fired at the end of 2019 for an affair with a member of the staff, accusing him of having lied at the time on the board of directors while hiding other connections and engaging in fraudulent actions.

Twitter took 0.81%. According to the Wall Street Journal, the social network has started preliminary discussions for a possible merger with Tiktok, an application that Donald Trump accuses of spying for the benefit of China and threatens to ban on American soil.

Microsoft has publicly expressed interest in acquiring TikTok’s North American, Australian and New Zealand operations.

Berkshire Hathaway gained 1.48%. The holding of famous investor Warren Buffett repurchased around $ 5.1 billion of its own shares in the second quarter during which the company’s activities suffered from the consequences of the coronavirus pandemic.

On the bond market, the 10-year rate on US debt rose around 4:50 p.m. to 0.5772% against 0.5640% on Friday night.