U.S. stocks opened the session flat before moving higher on Gilead’s Remdesivir drug showing improved clinical recovery while reducing the risk of death in Covid-19 patients. That good news kept a lid on potential losses stemming from the Producer Price Index (PPI) surprising economists with a drop of 0.2% in June. Economists were forecasting for a climb of 0.4% but rising costs for energy goods were a drag last month. The news of Remdesivir’s success led to a rotation out of technology stocks and into Airlines and Cruise lines stocks, led by United Continental (+8.3%) and Carnival Corp (+10.8%). The advance was led by Financials (XLF), Energy (XLE) and Utilities (XLU), while Health Care (XLV), Technology (XLK), and Real Estate (XLRE) were all lower. The DJIA finished the week higher after gaining 369.21 points (+1.44%) today, to settle at 26075.30 while the S&P 500 climbed 32.99 points (+1.05%) and ended the session at 3185.04. The NASDAQ continues its red-hot streak where it jumped 69.69 points (+0.66%) to settle at 10617.44. The NASDAQ has now closed at new all-time highs in six of the last seven sessions.

Breadth was bullish with advancing issues beating declining issues by 3:1 on the NYSE and 769 units on the NASDAQ. Advancing volume was 82% on the NYSE and 62% on the NASDAQ. VIX moved back down 1.97points (-6.73%) and finished at 27.29. Crude oil prices improved by 1.00 points (+2.52%) and the September contract closed at $40.62 a barrel. Gold inched lower by 2.00 (-0.11%) to $1801.80 an ounce.

As we mentioned earlier this week, the market can seemingly digest news of rising Covid-19 cases so long as the mortality rate remains low and progress is being made on a breakthrough vaccine. Momentum, as measured by the 14-day RSI, ticked up while the NYSE A/D line, a leading indicator of net advances, closed nearly even after tumbling during the middle part of the week. Next week, a range of economic factors and important earnings reports are on the slate. Market participants will gauge closely if a recovery is in full swing or if the pandemic shifts into reverse.

Earnings releases to watch for on Monday includes: PepsiCo (PEP)

By Richard Cuvilly