Stocks jump 3.4%, hold on this time
Stocks shot to a 3.4% gain Wednesday on Wall Street as investors chose to focus on the optimistic side of data about the coronavirus outbreak’s trajectory.
It’s the latest about-face in this brutally volatile stretch for the U.S. stock market, which has flipflopped from gains to losses for six consecutive days. Just a day before, stocks were headed for a similar gain, only for it to vanish in the last minutes of trading.
The market’s upward swings have recently been bigger than the down moves, though, amid signs that deaths and infections may be nearing a peak or plateau in some of the world’s hardest-hit areas. That’s led some investors to envision the other side of the economic shutdown that is gripping the world as authorities try to slow the spread of the virus. The S&P 500 has jumped nearly 23% in the last 2½ weeks, building on earlier gains driven by massive amounts of aid promised by governments and central banks for the economy and markets.
Many analysts say they’re skeptical of the rally, given how much uncertainty still remains. The pandemic’s death toll continues to rise, millions of people are still losing their jobs by the week and the economic pain is worldwide. France’s central bank said its economy entered a recession with a 6% drop in the first three months of the year.
But optimism rose in the market Wednesday after Dr. Anthony Fauci, the top U.S. infectious diseases expert, said the White House is working on plans to eventually reopen the country. President Donald Trump later said it “will be sooner rather than later.”
“It’s positive that people are talking about reopening the economy,” said Jeff Buchbinder, equity strategist for LPL Financial. “The White House has been talking about that. The more we can focus on what the economy will look like several months out, the better it will be for markets.”
The S&P 500 climbed 90.57 points, or 3.4%, and closed at 2,749.98. For some investors, its rally of more than 20% since March 23 means a new “bull market” has been born. Others, though, want to see the gains hold for six months before confirming a new bull market.
The Dow Jones industrial average soared 779.71 points, or 3.4%, and closed at 23,433.57. The Nasdaq was up 203.64 points, or 2.6%, and closed at 8,090.90.
Stocks that have been beaten down the most since the selloff began in February helped lead the way, including energy companies, retailers and travelrelated companies.
Gap rose 12.6%, United Airlines gained 12.4% and Diamondback Energy was up 13.5% as investors envisioned people shopping again at stores, flying for vacations and driving to the office once stay-at-home orders are relaxed. All three, though, are still down more than 50% for 2020.
Shares of health insurers and other stocks received an extra boost after Bernie Sanders suspended his presidential campaign. Investors had been wary of Sanders’ proposal of “Medicare for All” and other plans that could have restricted profits.
UnitedHealth rose 8% after being down in the morning, and Anthem jumped 10.3%.
Another bounce came in the afternoon after the Federal Reserve released minutes from its meeting last month, where it slashed short-term interest rates back to nearly zero. The minutes confirmed expectations that the Fed will do “whatever it takes” to support markets, said Bob Miller, head of Americas fundamental fixed income at BlackRock.
Uncertainty, though, is still the dominant force in markets. The World Trade Organization said global trade could fall 13% to 32% this year because of the pandemic.