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Day Ahead: 3 Things to Watch for August 11

imageStock Markets3 hours ago (Aug 10, 2020 04:26PM ET)

(C) Reuters.

By Liz Moyer — Blue chip stocks overcame weakness in the technology sector on Monday as the Dow surged despite lack of clarity on the timing of new economic stimulus from Washington.

The Dow Jones Industrial Average rose more than 360 points, or 1.3%, while the NASDAQ Compositedropped 0.39%. The S&P 500 which closed up 0.29%, is drawing nearer to its mid-February peak, regaining nearly all of the steep drop during the spring as businesses and people hunkered down amid a growing pandemic.

Second quarter earnings season is largely over, leaving investors to ride out the rest of the typically quiet late summer. School children prepare to return to the classroom in most of the country after evidence that early-to-open districts are seeing pockets of Covid outbreaks. Big 10 football might be canceled for the fall, which could be a hit to local economies that depend on revenue from college ball.

Here are three things that could affect markets tomorrow:

1. Energy sector comes back to life

Energy stocks, which have been the worst performing S&P sector this year, showed signs of life on Monday after positive economic data out of China as well as comments about demand by Saudi Aramco (SE:2222).

Crude Oil WTI Futures, the U.S. benchmark, rose 2% on Monday, topping $42, while Brent Oil Futures crude, the international standard, rose 1.4%, to over $45.

The mini-rally could extend into Tuesday as traders anticipate the release of weekly data on oil inventories. Industry and government data showed last week that inventories have been dropping.

2. Travel and delivery stocks also in spotlight

Transportation continued its rally on Monday, with the Dow Jones Transportation rising 2.7% after notching a 5.8% gain last week. FedEx Corporation (NYSE:FDX) helped drive the gain after Bernstein upgraded the stock to outperform from market perform and set a price target of $255. Shares of FedEx jumped 8.9% to $199.84.

Rival delivery company United Parcel Service Inc (NYSE:UPS) jumped 3% and set a record high after reports on Friday it would hike fees on retailers during the upcoming holiday season. It closed up 1.7%.

Meanwhile, airlines also got a boost, with United Airlines Holdings Inc (NASDAQ:UAL) is up 9%, and American Airlines Group (NASDAQ:AAL), JetBlue Airways Corp (NASDAQ:JBLU) and Delta Air Lines Inc (NYSE:DAL) are up more than 7%. Data from the Transportation Security Administration indicated that travelers going through TSA checkpoints rose to 831,789, up from 799,861 the week before and the most since March 17, when much of the U.S. shut down over Covid fears. The number is still down nearly 70% from a year ago.

3. Dining in is the new eating out

Meal kits and meal delivery services benefited when Americans were forced to stay at home and away from restaurant dining rooms to prevent the spread of Covid-19.

On Monday, HelloFresh SE (DE:HFGG) said it had witnessed “more favorable than expected summer seasonality” and additional demand with the return of Covid outbreaks in certain markets. The company raised its outlook for the year, saying revenue growth would likely be 75% to 95% from a previous range of 55% to 70%. It is scheduled to post earnings for the first six months of 2020 on Tuesday.

Shares of HelloFresh rose 1%.

Rival Blue Apron Holdings Inc (NYSE:APRN) fell 1.6%, and delivery service Grubhub Inc (NYSE:GRUB) fell 0.2%. Last week, Uber Technologies Inc (NYSE:UBER)announced that while its ride-hailing service slumped, revenue from Uber Eats delivery service surged in the quarter, with revenue rising 113% to $1.2 billion.

Day Ahead: 3 Things to Watch for August 11

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