S&P 500 rises as fiscal stimulus hopes offset Sino-U.S. worries

(Reuters) – The S&P 500 ticked higher in a choppy session on Wednesday as a boost from Microsoft and optimism about another round of stimulus for the virus-stricken economy countered worries over worsening ties between the United States and China.

Tesla Inc (TSLA.O) and Microsoft Corp (MSFT.O) rose 1.2% and 0.8% in the run up to their quarterly reports due after markets close.

A largely upbeat start to the second-quarter earnings season, hopes for an eventual COVID-19 vaccine and an expected official support for the economy has brought the S&P 500 within 4% below its record February closing high.

Republicans and Democrats in Congress aim to pass a fourth coronavirus aid package before the end of the month, but they will have to overcome significant differences.[nL2N2ES0VK]

“While prospects of a new spending bill may counter some negative sentiment, the market doesn’t always move in one direction,” said Mike Loewengart, managing director of investment strategy at E*TRADE Financial Corp.

“The decidedly more cautious tone from the Trump administration on the coronavirus front … coupled with rising tensions with China, there is enough out there for some investors to want to sit out for a round or two.”

Earlier on Wednesday, futures had taken a hit after Washington told China to close its consulate in Houston, citing a need to protect American intellectual property and information, deepening a deterioration in bilateral relations. A source said Beijing was considering shutting down the U.S. consulate in Wuhan.

At 11:39 a.m. ET, the Dow Jones Industrial Average .DJI was up 85.53 points, or 0.32%, at 26,925.93, the S&P 500 .SPX was up 6.02 points, or 0.18%, at 3,263.32. The Nasdaq Composite .IXIC was down 0.61 points, or 0.01%, at 10,679.76.

The real estate .SPLRCR sectors rose about 1%, the most among major S&P sectors, while financials .SPSY and energy .SPNY underperformed.

Pfizer Inc (PFE.N) advanced 3.3% as the drugmaker and German biotech firm BioNTech SE (22UAy.F) said they would get $1.95 billion from the U.S. government to produce and deliver 100 million doses of their COVID-19 vaccine candidate.

Hospital operator HCA Healthcare Inc (HCA.N) surged 9.4% after reporting better-than-expected quarterly revenue. Thermo Fisher Scientific Inc (TMO.N) jumped 1.7% after the scientific instruments maker beat second-quarter results.

Snap Inc (SNAP.N) declined 7.9% as it forecast fewer current-quarter users than estimates and said the initial lift in user growth at the start of coronavirus-led lockdowns dissipated faster than it expected.

Advancing issues outnumbered decliners by a 1.30-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.29-to-1 ratio on the Nasdaq.

The S&P index recorded 36 new 52-week highs and one new low, while the Nasdaq recorded 66 new highs and seven new lows.

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