Dow Jones Pops on Fed's Latest Venture into Bond Purchasing

Garrett Baldwin

The Dow Jones soared today after the U.S. Federal Reserve pledged to start purchasing individual corporate bonds. That's on top of the exchange-traded funds it already plans to purchase.

The central bank said it has up to $750 billion to purchase new forms of corporate credit. The decision yesterday reversed a significant downturn Monday afternoon. More on this below.

Here are the numbers from Monday for the Dow, S&P 500, and Nasdaq:

Here are the most important market events and the stories that I'm following right now.

The Top Stock Market Stories for Tuesday

• On Tuesday, the markets pressed higher after the Federal Reserve signaled that it will continue to provide unprecedented support to the U.S. markets. The central bank is moving beyond ETFs and shifting toward individual corporate bonds. The news comes as Fed Chair Jerome Powell plans to testify before Congress over the next two days. This will be part of his semiannual appearance to discuss monetary policy and the economy with legislators.

• Meanwhile, COVID-19 has emerged in Beijing, China, raising new concerns about the spread of the deadly virus around the globe. There is a cluster of 27 coronavirus cases in the nation's capital. These were part of a new batch of cases after the government had reported no new cases for roughly two months. Meanwhile, Johns Hopkins University reports that the number of global cases of COVID-19 has topped 8 million. The U.S. accounted for about 2.11 million of those cases. The number of deaths in the United States now sits at more than 116,000.
• Finally, the Treasury Department has signaled that the Trump administration has virtually no plans to shut the economy again despite recent spikes of COVID-19 in states across the country. However, the economy could face challenges. The White House has said it doesn't want to extend the $600-per week unemployment benefits until next year. It wants to do everything to reduce the unemployment rate. One proposal, once benefits end on July 31, is to replace those weekly benefits with temporary payments to employees who do return to work in August. Current proposals include the possibility of temporary payments of $450 per week.

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Stocks to Watch Today: CHK, TPC, ORCL, MCD

• Shares of Chesapeake Energy Corp. (NYSE: CHK) are in a free fall on news that the embattled natural gas company plans to declare bankruptcy as soon as next week. The company is reportedly seeking a $900 million debtor-in-possession loan to help support its operations while it undergoes Chapter 11. The company has one of the ugliest balance sheets in finance, currently totaling about $9 billion.
• Shares of Tutor Perini Corp. (NYSE: TPC) and other infrastructure stocks rallied on news that the Trump administration is considering a $1 trillion infrastructure proposal to help stimulate the U.S. economy. According to a Bloomberg report, the proposal would set aside the bulk of the money for road and bridge projects, although there is some speculation that some money will be used on 5G projects and rural broadband.
• Shares of McDonald's Corp. (NYSE: MCD) are on the move after the fast food giant reported a massive downturn in same-store sales during the second quarter. The company said that Q2 same-store sales fell by 29.8% during the quarter. But it appears that the worst of it curtailed during May. Last month, same-store sales were off 5.1% compared to the same period in 2019.
• In earnings news, look for reports from Oracle Corp. (NYSE: ORCL), Groupon Inc. (NASDAQ: GRPN), and NextGen Healthcare Inc. (NASDAQ: NXGN).

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Garrett Baldwin

About the Author

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Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.

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