Asian Stocks Down, With Record COVID-19 Cases in U.S. Dampening Recovery Hopes By Investing.com



© Reuters.

By Gina Lee

Investing.com – Asian stock markets were mostly down on Friday, with investor hopes of a quick economic recovery dashed after the U.S. reported a record number of cases.

With states such as Florida, California and Texas reporting record numbers, over 60,000 new cases were reported in the country on Thursday.

Meanwhile, Hong Kong re-imposed tightened social distancing measures on Thursday to curb a new outbreak of cases in the city. Other cities currently under a second lockdown include Melbourne and Beijing.

“Coronavirus anxiety dominated market sentiment in a day where major economic releases were scarce… That left the focus on the high frequency data and daily COVID-19 news,” Kishti Sen, an economist at ANZ Research, said in a note.

Japan’s was down 0.36% by 11:12 PM ET (4:12 AM GMT) and South Korea’s was down 0.66%. Seoul’s mayor Won Soon Park was found dead in a suspected suicide after his daughter reported him missing on Thursday.

Down Under, the was down 0.14%.

Hong Kong’s was down 1.01%. China’s was down 0.84% while the was down 1.01%, with China’s markets putting an end to an almost three-week rally.

Capital Economics economist Oliver Jones told Reuters that the rise in China’s mainland equities bore similarities to the 2015 bubble, but on a smaller scale and with room for prices to inflate.

“That said, another boom-bust cycle in China’s equities could have even greater knock-on effects for markets elsewhere than before, with foreign holdings far higher now than five years ago,” he added.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Bad Day for Stocks Sends Bitcoin Price Below Key $9.3K Support By Cointelegraph



Bad Day for Stocks Sends Bitcoin Price Below Key $9.3K Support

Today (BTC) price abruptly dropped 2.93% to $9,160 before traders stepped in to push the price back to the $9,200 level.

The mild correction occurred as the Dow pulled back 370 points and the and Nasdaq also saw small losses. Gold also pulled back 0.92% but still is only $17 away from its recent high at $1,818.

Keep track of top crypto markets in real time here

Continue Reading on Coin Telegraph

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Asian Stocks Mostly Up on Back of Positive U.S. Data, But Curbed by Increasing COVID-19 Cases By Investing.com



© Reuters.

By Gina Lee

Investing.com – Asian stocks were mixed on Tuesday morning, with investors balancing out positive data from the U.S. with the ever-increasing number of COVID-19 cases globally.

Stocks received a boost from the U.S. reporting a reading of 57.1 for June’s on Monday. The figure exceeded analyst forecasts and indicated the U.S. services sector’s return to growth.

“Investors have recognized that as bad as the economy in the U.S. is, it’s not as bad as what people thought it would look like in March and April. The market has started to sense we might see better than anticipated results fairly broadly across a wide spread of companies,” Nancy Prial, co-chief executive officer at Essex Investment Management, told Bloomberg.

But investor risk appetite was muted by the number of global COVID-19 cases topping 11.5 million as of July 7, according to Johns Hopkins University data.

China’s was up 1.32% by 11:40 PM ET (4:40 AM GMT) and the was up 2.62%. Chinese stocks continued to build on its gains from the previous day. Hong Kong’s was up by 0.12%.

Down Under, the rose 0.81%, with the Reserve Bank of Australia expected to hold the interest rate at 0.25% and keep its policy unchanged during its board meeting later in the day.

“The RBA this afternoon can confidently expected to be on hold as it continues to assess the outlook, where even in its best-case upside scenario, full economic recovery will take years,” Ray Attrill, head of foreign exchange strategy at National Australia Bank (OTC:), said in a note.

Japan’s fell 0.46% and South Korea’s slid 0.19%.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Stocks rally to four-week highs as investors bet on China revival By Reuters


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© Reuters. A man wearing protective face mask walks in front of a stock quotation board outside a brokerage in Tokyo

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By Ritvik Carvalho

LONDON (Reuters) – Global stock markets rallied to four-week highs and headed for its best day against the dollar since December on Monday as investors counted on a revival in China to boost global growth, even as surging coronavirus cases delayed business re-openings across the United States.

MSCI’s All-Country World Index, which tracks shares across 49 countries, rose 0.7% to its highest since June 6, by midday in London.

European shares jumped, with the pan-European index rising 1.4%. Stocks exposed to China — carmakers, industrials, energy firms and luxury goods makers — rose strongly, while banks also rallied.

In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 1.8% to its highest since February, with the bullish sentiment spilling into other markets.

E-Mini futures for the S&P 500 gained 1.1%.

Chinese blue chips jumped 5.7% on top of a 7% gain last week to their highest in five years. Even , which has lagged with a soft domestic economy, managed to rise 1.8%.

China’s was on track for its best day against the dollar since December, up nearly 0.7% at 7.0210 per dollar.

Among the reasons investors cited for the buying was improving economic data – UBS noted Citi’s Economic Surprise Index for the U.S. has risen to its highest level on record. The index measures how well economic data releases are faring relative to consensus forecasts.

Some cited an editorial in the China Securities Journal, which said on Monday that China needed a bull market to help fund its rapidly developing digital economy.

“We advise against regarding uncertainty as a reason for exiting markets. Instead, we see ways for investors to cope with uncertainty – including averaging into markets – or even take advantage of volatility,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.

In Hong Kong, Jefferies (NYSE:) chief global equity strategist Sean Darby said the positive sentiment towards Asian markets was the result of better-than-expected regional economic data and elevated liquidity levels.

“All of the global monetary policy indicators are flashing green right now. It is very loose and that should mean markets which have underperformed should do well,” Darby told Reuters.

“The dollar has also been weaker over the past five days so emerging markets, led by China, normally do well on that back of that.”

Most markets gained ground last week as a raft of economic data from June beat expectations, although the resurgence of coronavirus cases in the United States is clouding the future.

In the first four days of July alone, 15 states have reported record increases in new cases of COVID-19, which has infected nearly 3 million Americans and killed about 130,000, according to a Reuters tally.

Analysts estimate that re-openings affecting 40% of the U.S. population have now been wound back.

“Markets will have to climb a wall of worry in July as economic activity likely softens from the V-shaped recovery seen over recent months,” said Robert Rennie, head of financial market strategy at Westpac. “We must remember, too, that U.S. and China relations are deteriorating noticeably.”

Two U.S. aircraft carriers conducted exercises in the disputed South China Sea on Saturday, the U.S. Navy said, as China carried out military drills that have been criticised by the Pentagon and neighbouring states.

The risks, combined with unceasing stimulus from central banks, have kept sovereign bonds supported in the face of better economic data. U.S. 10-year yields edged up to 0.7% on Monday, well off the June top of 0.959%.

Italy’s 10-year bond yield fell 4 basis points to around 1.29% — pushing towards more than three-month lows hit last week. That squeezed the gap over benchmark German Bund yields to around 171 basis points.

Analysts at Citi estimate global central banks are likely to buy $6 trillion of financial assets over the next 12 months, more than twice the previous peak.

Major currencies have been largely range-bound with the down 0.3% at 96.894, having spent an entire month in a snug band of 95.714 to 97.808.

The dollar was flat against the yen at 107.50 on Monday. The euro rose 0.6% against the dollar, above the $1.13 mark.

In commodity markets, gold has benefited from super-low interest rates across the globe as negative real yields for many bonds make the non-interest-paying metal more attractive.

traded at $1,776.21 per ounce, just off last week’s peak of $1,788.96.

Oil prices were mixed with futures up 1.2% at $43.58 a barrel. was flat at $40.65 a barrel, amid worries the surge in U.S. coronavirus cases would curb fuel demand.



Wall Street Kicks Off Q3 With More Gains As Stimulus Boosts Stocks By Investing.com




By Jesse Cohen

Investing.com – After wrapping up its best quarter in decades, stocks on Wall Street kicked off the third quarter with more gains as the economy tries to recover from the coronavirus pandemic.

The rose 3.3% this week while the jumped 4% in the same time period. It was the Dow and S&P 500′s biggest weekly gains since June 5.

The tech-heavy , meanwhile, climbed 4.6% this week for its biggest weekly increase since May 8.

The strong weekly gains follow the market’s best quarterly performance in decades. The Dow ended the second quarter with a 17.8% gain, its biggest quarterly rally since 1987.

The S&P 500 scored its biggest single-quarter surge since 1998, soaring nearly 20%.

Meanwhile, the Nasdaq soared 30.6% for the quarter, its best quarterly performance since 1999.

Stocks have rallied sharply in recent months, with all three benchmarks up more than 40% from their lows set on March 23 – when coronavirus-related lockdowns shocked the stock market – as a barrage of stimulus from the Federal Reserve and the U.S. government boosted risk appetite.

To see more of Investing.com’s weekly comics, visit: http://www.investing.com/analysis/comics

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Asian stocks rise on vaccine hopes, eyes on U.S. payrolls By Reuters



© Reuters. An SGX sign is pictured at Singapore Stock Exchange

By Swati Pandey and Imani Moise

SYDNEY/NEW YORK (Reuters) – Asian stocks tracked Wall Street higher on Thursday although sentiment was cautious ahead of U.S. employment data while prices jumped to more than six-month highs on a better global outlook and supply fears in top producer Chile.

MSCI’s broadest index of Asia Pacific shares outside of Japan rose 0.9% with all major indexes trading higher on hopes of a vaccine for COVID-19, which has killed more than half a million people globally and shut down the world economy.

rose 0.4%, China’s blue-chip index added 0.6% while Hong Kong’s climbed 1.7%.

E-mini futures for the S&P 500 were flat.

U.S. employment figures due later in the day are expected to show if the world’s largest economy can sustain its fragile recovery as new COVID-19 cases accelerate in several southern states.

Economists polled by Reuters expect private employers to show 2.9 new million new jobs June, which would follow a surprise increase in May. Casting some doubt over that projection, however, was a smaller-than-expected increase in jobs seen in the ADP report on Wednesday.

“A better-than-expected outcome could go some way to settling the near-term debate that the U.S. labor market will heal relatively quickly and justify new highs in U.S. equities,” said Stephen Innes, strategist at AxiCorp.

Wall Street ended Wednesday higher after key economic indicators showed a rebound in Chinese manufacturing activity as it recovers from the pandemic while sharp declines in European factory activity eased.

Risk sentiment was whetted by a COVID-19 vaccine from Pfizer (NYSE:) and Germany’s BioNTech, which was found to be well tolerated in early-stage human trials. ()

Equity investors shrugged off concerns about Hong Kong where police arrested more than 300 people protesting sweeping new laws introduced by China to snuff out dissent.

Those developments have raised concerns about China’s already strained relations with its major western trading partners, particularly the United States.

The U.S. House of Representatives passed legislation on Wednesday that would penalize banks doing business with Chinese officials who implement a national security law.

In commodities, the most-traded August copper contract on the Shanghai Futures Exchange touched 49,570 yuan ($7,016.28) a tonne, its highest since Dec. 30, 2019.

Manufacturing activity rebounded in the United States in June, while the factory sector in Germany, Europe’s largest economy, contracted at a slower pace and top copper consumer China posted better-than-expected manufacturing data.

Meanwhile in Chile, where the number of COVID-19 cases have been climbing, miner BHP said it would begin to slow production at its small Cerro Colorado copper mine in the country.

Elsewhere, oil prices eased and gold was a tad softer too while the dollar was steady in a sign of investor caution despite encouraging macro data.[O/R][GOL/]

slipped 6 cents to $41.97 a barrel. was off 12 cents at $39.70 a barrel. U.S. was 0.12% lower, at $1,777.70.

The safehaven greenback was unchanged against the Japanese yen at 107.45. The euro barely moved too and was last at $1.1254 while sterling was treading water at $1.2477.

That left the at 97.139.



Asian Stocks Boosted With Positive Chinese Data, But COVID-19 Worries Remain By Investing.com



© Reuters.

By Gina Lee

Investing.com – Asian stocks were up on Tuesday morning in Asia and were poised to end the last day of the year’s second quarter with gains not seen since 2009.

China’s was up 0.47% by 11:23 PM ET (4:23 AM GMT) and the was up 1.50%, boosted by the country reporting a better-than-expected of 50.9 for June. The figure indicates a second consecutive month of growth, with May’s manufacturing PMI of 50.6.

Hong Kong’s was up by 0.91%, retreating slightly from earlier gains after the National People’s Congress Standing committee passed national security laws for the city earlier in the day. Investors will be monitoring the U.S. reaction, with Commerce Secretary Wilbur Ross saying on Wednesday that the U.S. would suspend preferential treatment regulations for Hong Kong, which include export license exceptions.

Japan’s rose 1.59%. The country’s Ministry of Economy, Trade and Industry reported a drop of 8.4% month-on-month in May’s earlier in the day.

South Korea’s gained 1.38% and Down Under, the rose 1.46%.

The positive data from China was balanced with ever-rising COVID-19 numbers. Over 10.2 million cases globally as of June 30 according to Johns Hopkins University, and there is no forthcoming cure.

“It’s not clear what trajectory coronavirus is heading… but I also think because we’re into quarter-end, there’s been some re-balancing. So I’m kind of in the camp that any weakness is short-lived. I would think July is going to be a strong month for stocks,” Tom Lee, co-founder and head of research at Fundstrat Global Advisors, told Bloomberg.

Meanwhile, U.S. Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin will testify before the House Financial Services Committee later in the day.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



The Case for FAANG Stocks By Investing.com



© Reuters.

By Peter Nurse and Yasin Ebrahim

Investing.com — The FAANG stocks have had a good coronavirus crisis, but investors should start thinking about whether these gains can continue. Peter Nurse argues that the group is behaving like the dotcom’s in 1999, before the bursting of that first internet bubble. Yasin Ebrahim makes the case that the group offers investors a chance to buy the dip amid fears of a second wave of coronavirus lockdowns.

The Bear Case

While the U.S. economy has struggled to recover from the mass unemployment and output collapse caused by the social distancing measures used to combat the virus, Wall Street has bounced back strongly from the initial crash, powered by all-powerful tech stocks.

Facebook (NASDAQ:), Apple (NASDAQ:), Amazon (NASDAQ:), Microsoft (NASDAQ:), Alphabet (NASDAQ:), or the so-called Fab 5, making up 40% of the Index, have shown to be big winners when the world goes into lockdown.

Facebook, Amazon, Apple and Netflix (NASDAQ:) have all hit record highs this month, while Google owner Alphabet isn’t far removed.

These stocks now have a combined market capitalization of over $4.7 trillion, meaning the market cap of the Nasdaq Composite is concentrated in the five largest stocks to a degree not witnessed since the peak of the Tech bubble at the turn of the century.

“The market has favoured these companies and they have been flavour of the month since the Covid pandemic erupted,” said Zehrid Osmani at Legg Mason affiliate Martin Currie. “The risk now is that these obvious beneficiaries of lockdown have been bid up a lot, and now it’s a question of what is in the price going forward.”

And they are starting to look expensive.

For example, Netflix is currently trading on a price/earnings ratio of around 94, which compares with 78.35 at the end of last year when the Covid-19 outbreak was not a consideration in any investors’ thought process. Amazon’s current P/E stands around 131, versus 80.31; Apple above 28, versus 23.20 and so on.

These companies are also all now facing a number of pressing fundamental issues.

Amazon and Google face the hard stare of regulatory scrutiny for possible anti-competitive business practices. Netflix is competing with a number of new rivals in streaming video as well as having to cope with the extremely expensive business of producing new content.

European competition officials have already announced investigations into both Apple’s App Store and its payment platform, Apple Pay, while the U.S. Department of Justice has long been rumoured to be on the verge of doing something similar.

Facebook and Google have already had to cope with a sharp drop in advertising spending during the coronavirus pandemic, and are going to have to compete with the major broadcasters for likely reduced advertising budgets going forward.

The Wall Street Journal reported last week that U.S. advertising spending is expected to plunge by 13% this year, according to research from GroupM, a unit of advertising giant WPP (LON:) PLC. It was only in December it was forecasting U.S. ad spending would rise by 4% in 2020.

The social media companies, including Facebook, have drawn the ire of President Donald Trump, who signed an executive order to roll back their legal protections after accusing them of trying to silence conservative voices.

On the flip side, Verizon (NYSE:) announced Thursday it was pulling its advertising from Facebook, the biggest name so far in a growing movement to boycott the social network for not doing enough to stop hate speech on its platforms.

On top of this, Facebook and Google have been criticized for lack of data privacy and security.

Despite their valuations increasing during the crisis, the profits at the tech giants have actually fallen along with the rest of the market, said Societe Generale’s ultra-bear Albert Edwards in a research note late last month, and unless a cyclical recovery is on the cards this is set to continue.

“I personally suspect that this recession will ultimately expose these and the tech sector to be far more cyclical than appreciated. And it will be difficult in that environment to maintain their 32x forward PE,” Edwards added.

The Bull Case: Second Wave Fears a Second Chance to Buy the Dip

 

The bloody end to the week for the broader market may have tempted some to suggest the time has come to hoist the white flag on tech, but on closer inspection the swing lower will likely favor those willing to buy the dip.

 

The tech-heavy Nasdaq has rallied about 42% since hitting its March low, and with the end of the second quarter fast approaching, it is not unreasonable to suggest the move lower this week was sparked by profit taking.

 

“We could see some profit taking in the last four days in the last week of quarter … historically, strong quarters showed weaker than average performance, heading into that final week of the quarter,” Paul Hickey, co-founder of Bespoke Investment Group told CNBC in an interview.

 

In the event of a possible dip, “we would be using that opportunity to buy names and add exposure,” Hickey added.

 

The move lower in tech, however, did coincide with a daily record surge in coronavirus cases, which admittedly, has stirred the cocktail of uncertainty, but has hardly shaken the fundamental reason to stay loyal to tech: growth. 

 

The collective group of mega cap tech rode the wave of higher demand for products, and services that support online commerce and keep businesses operating during the pandemic.

 

With rising infections rekindling fears that lockdown could unleash the sort of economic savagery that recently brought global economies to a grinding halt, the ‘Fab 5’ could likely prove as good a place as any in the equity market to seek refuge ahead of a potential second wave.

 

“Mega tech stocks… are interestingly now viewed as defensive plays,” Kirk Hartman, president and global chief investment officer at Wells Fargo Asset Management, told Bloomberg in an interview earlier this week.

 

Boasting “pretty certain cash flows,” in a near-zero percent interest rate, mega tech stock are being discounted at a very low level, Hartman added.



Davey ‘Day Trader’ Portnoy Leads An Army Of New Retail Traders Into Stocks By Investing.com




By Jesse Cohen

Investing.com – Barstool Sports founder Dave Portnoy has become the poster child of the day-trading craze that has helped push stocks to record highs in recent weeks, much to the chagrin of Wall Street’s veteran investors.

Portnoy, who live-streams his experience under the moniker Davey Day Trader Global (DDTG) to his 1.5 million Twitter followers, shifted his focus to day-trading when the coronavirus pandemic brought sporting events to a halt earlier this year.

The sports-bettor-turned-investor has drawn the ire of institutional investors thanks to his and loud statements about how easy investing is and that stocks only go up.

Portnoy also has a willing army of compatriots diving into stocks – .

The trading platform added three million new accounts in the first four months of this year. Half of their new customers said they were first-time investors.

Billionaire Leon Cooperman recently warned that the rise in Robinhood trading will “end in tears” as according to him many of these day-traders are unaware of the risks.

But Portnoy, who has already poked fun at the likes of veteran investors such as Warren Buffett and Howard Marks, dismissed those comments.

To see more of Investing.com’s weekly comics, visit: http://www.investing.com/analysis/comics

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Investors eye economic data, stimulus measures as stocks rally stalls By Reuters


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© Reuters. The Fearless Girl statue is seen outside the NYSE in New York

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By April Joyner

NEW YORK (Reuters) – Upcoming U.S. economic data and deadlines for renewing some fiscal stimulus measures in July could prove key tests for an equities rebound that has wavered in recent weeks.

The benchmark S&P 500 has risen about 34% from its late March lows. But those gains have slowed in June, as investors weigh expectations of further stimulus and improving data against a resurgence in coronavirus cases in the United States.

Investors will look to a raft of U.S. data next week – including reports on employment, consumer confidence and manufacturing – for clues on whether a nascent rebound in the U.S. economy remains intact.

Improvements in some economic indicators, such as home sales, manufacturing activity and an unexpected bounce in employment data last month, have bolstered investor confidence and helped extend the rally in stocks. But others, including scant declines in jobless claims, reflect a still-tentative recovery.

“There’s some evidence that the economy is expanding, but how robust it will be is an open question,” said David Joy, chief market strategist at Ameriprise Financial (NYSE:).

Market participants are also looking for clues on whether lawmakers are likely to push through more fiscal stimulus measures in coming weeks.

The House of Representatives passed another $3 trillion aid bill in May, but the Republican-controlled Senate has not taken up the House package and lawmakers are not expected to move toward another coronavirus bill until sometime in July.

One component of Congress’ fiscal aid, a $600 per week supplement to unemployment insurance payments, is set to expire at the end of July.

Michael Wilson, chief U.S. equity strategist at Morgan Stanley (NYSE:), said that bill is critical to the bank’s thesis for a “V”-shaped U.S. economic recovery.

“Our outlook for the economy is probably going to have to change” without further stimulus, he said.

The looming deadline has added to a cluster of worries that have limited stocks’ gains this month. U.S. stocks tumbled this week, including a more than 2% drop on Friday, in response to a resurgence in the number of cases of COVID-19, the disease caused by the novel coronavirus.

Even with that recent pullback, stock valuations, as measured by forward price-to-earnings ratios, are near their highest level since the 2000 dot-com boom.

Other sources of worry include a potential flare-up in U.S.- China trade tensions and political uncertainty stemming from the Nov. 3 presidential election.

Some investors have already begun preparing for a potential market downturn by lightening their stock positions.

Oliver Pursche, president of Bronson Meadows Capital Management, said he recently sold shares of some tech-related companies, such as Amazon.com Inc (NASDAQ:)., in order to raise his cash allocation. Likewise, Richard Grasfeder, senior portfolio manager at Boston Private, has moved to a slight underweight position in U.S. equities.

In Grasfeder’s view, it could take longer than expected to see the impact of additional stimulus in economic data and corporate earnings.

“It’s going to take a while for those funds to flow through the economy,” he said.

Nonetheless, many on Wall Street remain confident that further aid will pass, given the presidential and congressional elections this November, and that will help prop up investor sentiment.

“My suspicion is it will happen before the July expiration,” said Ameriprise’s Joy. “You wouldn’t want to alienate your constituents unnecessarily.”

At the same time, some investors believe expectations that the Federal Reserve is ready to step in with further monetary support should the economy begin to falter will limit the downside in stocks and other risk assets.

Still, expectations for future market gyrations, as reflected by the Cboe Volatility Index, have remained elevated. Some volatility watchers believe markets could be choppier than usual this summer as investors await the passage of further stimulus and additional signs of economic recovery.

“It’s going to end up being a more volatile summer than traditionally is priced into the market,” said Amy Wu Silverman, equity derivatives strategist at RBC Capital Markets.