Optimism over vaccine, economy spur investors
The stock market bounced back from its worst week in nearly two months Monday as optimism about a potential vaccine for the coronavirus and hopes for a U.S. economic recovery in the second half of the year put investors in a buying mood.
The S&P 500 climbed 3.2% in its best day since early April. The gains erased all of its losses from last week, when the index posted its worst showing since late March and its third weekly loss in the last four. Bond yields rose broadly in another sign that investors were becoming more optimistic.
Stocks were headed for a higher opening on Wall Street when a drug company announced encouraging results in early testing of an experimental coronavirus vaccine. The stock of the company, Massachusetts-based Moderna, jumped 20%.
Investors were also encouraged by weekend remarks from Federal Reserve Chair Jerome Powell, who expressed optimism that the U.S. economy could begin to recover in the second half of the year. Once the outbreak has been contained, he said, the economy should be able to rebound “substantially.”
The S&P 500 gained 90.21 points to 2,953.91. The benchmark index is still down 12.8% from its alltime high on Feb. 19.
The Dow Jones Industrial Average climbed 911.95 points, or 3.9%, to 24,597.37. The Nasdaq composite rose 220.27 points, or 2.4%, to 9,234.83. Small- company stocks fared better than the rest of the market. The Russell 2000 index picked up 76.70 points, or 6.1%, to 1,333.69.
Investors are hoping a working vaccine f or COVID-19 can be developed and that it will help reassure people and businesses as the economy reopens.
“The question of how quickly people come back, or will they come back to the way they used to do things, that’s much different if you have a vaccine,” said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors.
Technology, financial and industrial stocks accounted for a big slice of the broad gains, along with companies that rely on consumer spending. Energy stocks also rose as the price of U.S. crude oil closed above $30 a barrel for the first time in two months.
Oil production cuts are kicking in at the same time that demand is rising as the U.S. and other countries ease some of the restrictions aimed at stemming the spread of the outbreak.
Benchmark U.S. crude oil for June delivery jumped 8.1% to settle at $31.82 a barrel. July Brent crude oil, the international standard, vaulted 7.1% to $34.81 a barrel.
Bonds yields rose, another sign that pessimism was diminishing. The yield on the 10-year Treasury note, a benchmark for interest rates on many consumer loans, rose to 0.72% from 0.64% late Friday.
Wall Street is hoping that the reopening of businesses and the relaxation of stayat-home mandates continue without any major setbacks, paving the way for corporate profits to bounce back.