Markets climb higher to close the quarter on a winning note

Dow rose 217 (finishing near session highs), advancers over decliners almost 2-1 & NAZ jumped 184 to close the qtr above 10K. The MLP index added 2+ to the 132s & the REIT index gained 4+ to the 345s.  Junk bond funds crawled higher & Treasuries were sold today.  Oil slid lower in the 39s & gold shot up 16 to 1798 (more on both below).

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The US is “not in total control” of the coronavirus pandemic & daily new cases could surpass 100K new infections per day if the outbreak continues at its current pace, White House health advisor Dr Anthony Fauci said.  The country is now reporting nearly 40K new coronavirus cases every day — almost double from about 22.8K in mid-May — driven largely by outbreaks in a number of states across the South & West.  Fauci said about 50% of all new cases are coming from 4 states: Florida, California, Texas & Arizona.  “I can’t make an accurate prediction but it’s going to be very disturbing,” Fauci told senators in a hearing today.  “We are now having 40-plus-thousand new cases a day. I would not be surprised if we go up to 100,000 a day if this does not turn around, and so I am very concerned.”  The number of new cases reported each day in the US is now outpacing Apr, when the virus rocked Washington state & parts of the Northeast, especially the New York City metropolitan area.  The US averaged 40K new cases per day over the past 7 days as of yesterday.  That average has risen by more than 40% compared with a week ago.  As of today, the 7-day average of daily new cases reported rose by more than 5% week over week in 40 states, according to the data.  Fauci's comments came in response to a question from Sen Elizabeth Warren who asked whether the US is heading in the right direction in terms of controlling the outbreak.  “Well I think the numbers speak for themselves,” Fauci said.  “I’m very concerned and I’m not satisfied with what’s going on because we’re going in the wrong direction if you look at the curves of the new cases, so we really have got to do something about that and we need to do it quickly.”  Outbreaks in states like Florida & Texas also threaten to disrupt the progress states like New York & New Jersey have so far made in driving down the outbreak in the Northeast, Fauci added.  New York, New Jersey & Connecticut last week announced they would mandate 14-day quarantines for any travelers coming from a states with rapidly expanding outbreaks.  Nonetheless, Fauci said increased infection anywhere in the country threatens to spread everywhere.  “I guarantee you that because when you have an outbreak in one part of the country, even though in other parts of the country they’re doing well, they are vulnerable,” Fauci said.  “I made that point very clearly last week at a press conference. We can’t just focus on those areas that are having a surge, it puts the entire country at risk.”  The outbreaks might be partly driven by states that reopened too soon & might have disregarded some of the federal guidance meant to help states restart safely, Fauci added.

Fauci says U.S. coronavirus outbreak is ‘going to be very disturbing,’ could top 100,000 cases a day

China said manufacturing activity expanded in Jun with the official Purchasing Manager's Index coming in at 50.9.  The forecast had expected the official manufacturing PMI number to come in at 50.4.  PMI readings above 50 indicate expansion, while those below that level signal contraction.  In May, official manufacturing PMI came in at 50.6, according to the National Bureau of Statistics.  PMI readings are sequential.  The bureau said in its announcement of the PMI reading that supply & demand are starting to pick up, with the index for new orders rising for 2 straight months.  Better readings in both the import & export indices are also helping, as major economies reopen.  However, uncertainties remain, the bureau cautioned, adding that the pandemic has not been effectively controlled overseas.  Data showed the index for new export orders was still in contractionary territory, even though the reading improved, coming in at 42.6 for the month of Jun from 35.3 in May.  China's manufacturing activity has been hit by shocks on both the supply & demand fronts due to large-scale lockdowns in many parts of the world aimed at containing the coronavirus pandemic.  While Chinese factories faced problems fulfilling orders early in the pandemic, they are now faced with a demand slump globally as the number of infected people passed the 10M threshold, according to Johns Hopkins University.  China's official services PMI meanwhile came in at 54.4 in Jun as compared to 53.6 in May.

China says its factory activity expanded in June but headwinds remain

Gold futures posted a gain of nearly 13% for the 3-month period ended today, the largest quarterly percentage climb since 2016, with analysts renewing talk of record prices by year end.  The Aug gold contract settled at $1800 an ounce, the highest finish since 2011.  Based on the most-active futures contracts, prices ended Q2 with a gain of 12.8%, the largest quarter percentage rise since 2016.  YTD, prices were up 18.2%.  Gold futures saw a record settlement of $1891 on Aug 22, 2011, according to  records dating back to 1984.

Gold posts largest quarterly gain in 4 years; talk of record prices by year end grows

Oil futures settled with a loss today, down nearly 36% in H1, as the spread of COVID-19 continued to feed expectations for weaker energy demand.  US benchmark prices, however, ended Q2 up 92%, rebounding from a record dip to a negative settlement in Apr as a group of major oil producers moved to reduce oil production & amid signs of some recovery in demand for oil.  Aug West Texas Intermediate oil fell 43¢ (1.1%) to settle at $39.27 a barrel.

Oil futures end down for the session, but post a more than 90% gain for the quarter

Stocks had a spectacular gain in Q2.  But that does not really tell the story well.  The Dow rebounded sharply from the Mar 31 low,  While the Apr advance was substantial, the May rise was smaller & it had only a small gain in Jun.  Meanwhile gold had risen into the 1700s until the last couple of weeks when it climbed to 1800.  The stock rally looks tired presently while nervous investors keep buying gold. 

Dow Jones Industrials