Stocks reverse gains as “one more down leg” seen

Markets were mixed on Tuesday.

The Nikkei 225 surged 2.0 percent and the STOXX Europe 600 jumped 1.9 percent but the S&P 500 gave up early gains to close 0.2 percent lower.

Oil prices fell after the US Energy Information Administration lowered its US and global benchmark price forecasts. West Texas Intermediate crude plunged 9.4 percent and Brent fell 3.6 percent.

Investors continued to take some comfort from a slowing trend in the rise of COVID-19 infections. Italy reported the lowest number of new coronavirus infections in nearly three weeks and China reported no new deaths, though deaths in Spain rose after declining for four consecutive days and New York reported its highest daily death toll yet.

Adam Phillips, director of portfolio strategy at EP Wealth Advisors, warned that “the virus is not under control yet” while Mizuho’s US Chief Economist Steven Ricchiuto suggested that “the Street appears to be betting on at least one more down leg to this correction before a sustained bounce begins”.