After diving over 200 points right out the gate, the Dow vacillated throughout the day to close down 109.  As has been the trend, investors are looking past the horrible economic data and looking towards recovery.  The concern today is that data from Germany and South Korea suggests that easing restrictions may be premature and that, though optimism remains fair, this could be quashed if infections re-emerge.  Q1 is almost over and 67% of S&P companies have beaten estimates.  The Q1 earnings forecast has once again been upgraded, this time to a 12.1% drop, quite a difference from the 15+% drop estimated a couple weeks ago.  Volume remains steady, today at about 10.1 billion shares. 

Mon  MAY 11, 2020 / 4:22 pm 

S&P 500 closes barely higher as investors balance pandemic with recovery

Stephen Culp

DJ: 24,331.32  +455.43       NAS:  9,121.32  +141.66       S&P: 2,929.80  +48.61     5/8

DJ: 24,221.99  -109.33        NAS:  9,192.34  +71.02         S&P: 2,930.32  +0.52       5/11

NEW YORK (Reuters) - The S&P 500 closed barely higher, eking out a nominal gain on Monday as investors weighed new spikes in coronavirus infections with expectations that an economy crippled by mandated shutdowns will soon be re-opened for business.  Technology and healthcare shares provided the biggest lift to all three major U.S. stock indexes and led the tech-heavy Nasdaq to its sixth consecutive advance.  The blue-chip Dow lost ground.  The S&P 500 and Dow Jones Industrial Average remain within 20% of all-time highs reached in February, and the tech-heavy Nasdaq is within 10% of its closing record.

Indeed, despite bleak recent economic data, including Friday’s 20.2 million drop in U.S. payrolls, Wall Street has gained in recent weeks as investors look beyond pandemic to recovery.  “Investors have been buying equities given the realistic expectation that massive fiscal and monetary stimulus will reignite economic and profit growth,” said David Carter, chief investment officer at Lenox Wealth Advisors in New York. “There is still a fair amount of optimism in the markets, but this could be quelled if coronavirus cases re-emerge.”

But a surge of new coronavirus infections in Germany and South Korea suggested early efforts to lift restrictions could be premature, even as businesses around the world, shuttered by social distancing restrictions, begin re-opening their doors.  “There’s really no playbook for a health crisis like the world is now experiencing,” Carter added. “With no playbook, there’s much less certainty and markets are more likely to vacillate.”

The Dow Jones Industrial Average .DJI fell 109.33 points, or 0.45%, to 24,221.99, the S&P 500 .SPX gained 0.39 points, or 0.01%, to 2,930.19 and the Nasdaq Composite .IXIC added 71.02 points, or 0.78%, to 9,192.34.  Of the 11 major sectors in the S&P 500, four closed in the black, with healthcare .SPXHC enjoying the largest percentage gain. 

First-quarter earnings season is nearing the final stretch, with 440 of the companies in the S&P 500 having reported. Of those, 67.5% have beaten Wall Street estimates, according to Refinitiv data.  In aggregate, S&P 500 earnings are seen to have dropped by 12.1% in the first quarter, compared with a year ago.

Drug distributor Cardinal Health Inc (CAH.N) jumped 6.7% as the pandemic boosted third-quarter sales.  Chesapeake Energy Corp (CHK.N) slid 12.2% after it said bankruptcy is among the options under consideration as the shale driller copes with plummeting oil and gas prices.

Marriott (MAR.O) missed first-quarter profit margins by a wide margin as bookings plunged. The hotel operator’s shares lost 5.6%.  Shares of Under Armour Inc (UAA.N) plunged 9.7% after the athletic wear company forecast a 50% to 60% drop in the second quarter as many of its stores remain shuttered.  Packaged food company General Mills (GIS.N) said it expects to surpass its fiscal 2020 sales expectations as consumers stock their pantries amid lockdowns, sending its stock up 1.8%. 

Declining issues outnumbered advancing ones on the NYSE by a 1.68-to-1 ratio; on Nasdaq, a 1.20-to-1 ratio favored decliners.  The S&P 500 posted 18 new 52-week highs and one new low; the Nasdaq Composite recorded 104 new highs and 10 new lows.

Volume on U.S. exchanges was 10.09 billion shares, compared with the 11.39 billion average for the full session over the last 20 trading days.