Stocks finish broadly higher
Stocks closed broadly higher on Wall Street on Tuesday as more countries relaxed restrictions on businesses, raising hopes for a recovery from the historic plunge that is sweeping the global economy.
The S& P 500 rose 0.9% after losing about half of its early gains in a late-afternoon burst of selling. Technology and health care stocks accounted for much of the gains, which followed a strong showing in overseas markets.
Investors are increasingly cautious ly optimistic that the gradual re opening of some businesses will begin to turn around the economy.
In California, some retail businesses could begin serving customers again as early as Friday, under some restrictions. Many European countries have also begun relaxing strict orders meant to slow the spread of the coronavirus outbreak, while waiting to see if it leads to a resurgence in infections. In Asia, the first pitches of the South Korean baseball season thwacked into catchers' mitts, albeit in stadiums with no fans in attendance.
Expectations for stronger demand for oil as more businesses get the green light to open helped drive crude oil prices sharply higher, extending its mini-rally after falling to record lows last month.
“It' s investors getting a little bit ahead of themselves ,” said Willie Delwiche, investment strategist at Baird. “Maybe, it's a sense of relief that we've made it this far and there's some sort of a path forward, even if it's not real clear.”
Delwiche noted that questions remain about at what pace will consumers venture out of their homes and spend money as shuttered businesses reopen. “That's the big unknown right now,” he said.
The stock market has been rallying since late March, as investors look beyond the devastation that's currently ravaging the global economy.
They' re focusing instead on the prospects for a resumption of growth later in the year, as well as on the massive support for markets provided by the Federal Reserve. Many analysts are skeptical of the stock market's rally, saying it's overdone given all the uncertainty about how long the recession will last, but the S& P 500 has nevertheless more than halved its losses from its sell-off earlier in the year.
A report released Tuesday morning showed that the U.S. services industry shrank for the first time in a decade, but it caused barely a ripple in the stock or bond market. It wasn't quite as terrible as economists had forecast.
“What we should be watching for is not that things are good; things are not going to be good,” said Brad McMillan, chief investment officer for Commonwealth Financial Network. “We should be watching for signs that things are less bad.”
“Just getting people back to work and businesses open again can improve attitudes and confidence,” he said.
The S&P 500 gained 25.70 points to 2,868.44. The Dow Jones Industrial Average rose 133.33 points, or 0.6%, to 23,883.09. The Nasdaq climbed 98.41 points, or 1.1%, to 8,809.12. Small stocks in the Russell 2000 index were doing even better than their larger rivals for much of the day, before shedding some of their gains by late afternoon. The Russell 2000 rose 9.54 points, or 0.8%, to 1,273.51.
Hopes that there opening of economies will eventually lead to a pickup in demand have also very recently helped oil prices pull off t he floor. A barrel of U.S. oil to be delivered in June jumped 20.5% to settle at $24.56 Tuesday, up from a low point of $6.50 set late last month. It's still well below the roughly $ 60 that it cost at the start of the year, after plunging on worries that the collapse in oil demand would lead to topped-out storage tanks.
Brent crude, the standard for international pricing, gained 13.9% to close at $30.97 per barrel.
“The feeling on the floor is that energy is in a better spot, and while i t's not brilliant,” the gulf between oil supplies and demand “is starting to shift in a more positive direction,” Chris Weston of Pepperstone said in a report.