Stocks rise on vaccine hopes; S&P 500 back within 5% of high

NEW YORK » Markets worldwide rallied on rising hopes for a COVID-19 vaccine Wednesday, and the S&P 500 climbed back to where it was a few days after it set its record early this year.

Investors see a vaccine as the best way for the economy and human life to get back to normal, and researchers said late Tuesday that one developed by the National Institutes of Health and Moderna revved up people’s immune systems in early testing, as hoped. The S&P 500 rose 0.9% to pull within 4.7% of its all-time high set in February.

The Dow Jones Industrial Average climbed 227.51 points, or 0.9%, to 26,870.10, and the Nasdaq composite gained 61.91, or 0.6%, to 10,550.49. During the morning, the S&P 500 touched its highest level since Feb. 25, and it ended the day at 3,226.56, up 29.04.

Several things helped lift the market, including stronger-than-expected reports on the economy and on corporate profits from Goldman Sachs and others. But the vaccine hopes were at the center of the rise, which meant the market’s leaderboard was dominated by companies that would benefit most from a return to normal life. They included cruise-ship operators, airlines, retailers and hotel chains.

Stocks of smaller companies also leaped much more than the rest of the market, an indication of rising expectations for the economy. The Russell 2000 index of smallcap stocks jumped 3.5%, a turnaround from earlier months when big, tech-oriented companies were carrying the market.

“Investors are gaining more confidence of the longer-term direction of the market,” said Sam Stovall, chief investment strategist at CFRA. “It’s not just the behemoth tech stocks that are likely to lead share prices higher, but that midand small-cap stocks will also benefit, not only from an economic recovery, but also from very low interest rates.”

Winners of the stay-athome economy created by quarantines and lockdowns, meanwhile, lagged behind. Clorox, Netflix and Amazon all fell.

Wednesday’s lift for markets, though, came only after another day of choppy trading. The S&P 500 shot to a quick 1.3% gain shortly after trading began, only to give up nearly all of it before swinging a couple more times.

It’s the latest bout of erratic trading for the market, which has been largely churning in place for weeks. The S&P 500 is almost exactly where it was on June 8. Often, it’s swung sharply within a single day as hopes for a budding economic recovery collide with continuing increases in coronavirus counts.

On Wednesday, as Wall Street was losing its stride, Florida announced another daily death toll of more than 100 and Oklahoma’s governor said he tested positive for the coronavirus.

“People should be thinking about a balance of optimism and realism,” said Nela Richardson, investment strategist at Edward Jones.

She said there is a “long climb” to go for the economy’s reopening and pointed to other risks for the market, including U.S. tensions with China.