By Yasin Ebrahim
Investing.com – The Dow rallied as late-buying swept through Wall Street Wednesday, led by tech as investors continue to shrug off rising Covid-19 cases.
Coronavirus cases in the U.S. have topped three million weeks after reaching two million, driven by the rapid spread of the virus in Florida, California and Texas.
The resurgence of the virus has reined in the paced of the economic recovery seen in the previous weeks as some states pause or roll back reopening plans, prompting investors to pull their bets on sectors tied to the progress of the economy.
United Airlines (NASDAQ:UAL) pared intraday to end higher after announcing it would cull 36,000 workers, or nearly half of its workforce, when Cares Act funding runs out on Oct. 1.
St. Louis Federal Reserve Bank President James Bullard, however, calmed some fears about the threat the surge in coronavirus cases poses to the economy and the rapid pace of rehiring seen over the past two months.
U.S. unemployment will likely fall to below 8%, or maybe even 7% by the end of the year, Bullard said in an interview on CNBC, estimating that most employees would be recalled to their jobs in the next 90 days.
A surge in tech stocks powered the broader market higher.
Apple (NASDAQ:AAPL) closed at all-time highs as Wall Street continued to back the stock on signs of a strong rebound in sales.
Deutsche Bank (DE:DBKGn) analyst Jeriel Ong raised his price target on Apple to $400 from $380, and maintained a buy rating on the stock, citing “prospects of a V-shaped recovery in Apple sales,” and App Store revenue strength.
Twitter (NYSE:TWTR), surged 7% as investors cheered signs that the company is taking steps to boost sales. The social media company posted a job listing for a new team, codenamed Gryphon, that would focus on building a subscription platform.
Facebook (NASDAQ:FB) cut losses to end up 1% as the social media giant appeared to take measures to address recent criticism on its handling over hate speech on its platform. The social media giant suspended a disinformation network tied to the staff of Brazil president Jair Bolsonaro and removed pages connected to U.S. President Donald Trump’s longtime adviser Roger Stone.
Earlier on Wednesday, an audit commissioned by Facebook had found its decisions were causing significant setbacks for civil rights.
In the face of rallying tech stocks, some have warned the sector is running too hot.
“The fact that the NASDAQ continues to press to new highs as broad participation weakens further is a clear and present divergence that needs to be repaired in the weeks ahead. If not, it would point to a bigger correction ahead, in our opinion,” warned Janney Montgomery Scott’s Director of Research, Dan Wantrobski.
Energy stocks were pushed higher as oil prices rebounded from session lows, shrugging off data showing a surprise weekly build in crude inventories.
Oil stockpiles rose 5.65 million barrels for the week ending July 4, the government agency said Wednesday. Analysts followed by Investing.com had forecast a draw of 3.1 million barrels. Inventories fell 7.1 million barrels the previous week.
In earnings news, Levi Strauss (NYSE:LEVI) swung to a loss and reported that sales slumped 62% in the second quarter, as store closures weighed on growth, sending its shares down more than 8.3%.
Elsewhere, Tesla (NASDAQ:TSLA) fell about 1.7%, posting back-to-back losses for the first time in three weeks. Tesla bears are starting to cave in the short term after the stock doubled in the past three months, but continue to tout bumpy road ahead for the electric automaker.
“While we still believe TSLA is fundamentally overvalued, we see nothing to prevent the shares moving higher in the coming weeks,” Barclays analyst Brian Johnson said in a note. Tesla could run into trouble, with negative data points expected to arrive in the fourth quarter, Johnson added.
Dow Makes Late-Dash Higher as Wave of Tech Buying Continues