USA TODAY International Edition
Stocks gain on hopes for economic recovery
Stocks surged Tuesday as hopes built for a coronavirus vaccine and economic activity picked up from historic lows as all 50 states begin allowing shuttered businesses to reopen.
The Standard & Poor’s 500 index crossed 3,000 for the first time since March 5.
Novavax announced the launch of human trials for its COVID- 19 vaccine, expecting initial results in July. Merck said Tuesday it plans to work with nonprofit research organizations to develop a vaccine.
The news follows announcements of several other potential vaccines.
“We don’t have just a couple of them in the pipeline,” says Ryan Detrick, senior market strategist at LPL Financial. “We’ve got a lot of shots that are out there.”
In midday trading, the Dow Jones Industrial Average was up about 660 points, or 2.7%, to 25,128. The S& P 500 index rose 58 points, or nearly 2%, to 3,013. The tech- heavy Nasdaq jumped about 1% to 9, 421.
The post- Memorial Day rally followed a strong rise in global markets as more nations push to open their
economies. The S& P 500 came off a solid week and is on track for a second straight month of gains. The index remains down 11.2% from its all- time high in February.
Bond yields were broadly higher in another sign of optimism. The yield on the 10- year Treasury note, a benchmark for interest rates on many consumer loans, rose to 0.69% from 0.66% late Friday.
Oil prices rose. Benchmark U. S. crude oil was up 3.5% to $ 34.41 a barrel. Brent crude oil, the international standard, was up 1.5% to $ 36.66.
Economic data Tuesday spotlighted glimmers of a rebound. Consumer confidence rose this month on an improvement in Americans’ short- term outlook, though it remained near sixyear lows, the Conference Board said. New home sales rose more sharply than expected in April.
There are early signs of at least a modest uptick in travel. The number of travelers passing through Transportation Security Administration checkpoints topped 340,000 on Memorial Day, well below 2.5 million a year ago but above the 87,000 bottom in midApril. Hotel occupancy reached 32% the week ending May 16, 54% below the year- ago figure but above 21% the week ending April 11.
“It’s optimism that the economy is coming back online faster than many people thought,” Detrick says.
All the states have begun gradual, phased reopenings of their economies. Despite mixed effects on the number of coronavirus cases, national daily counts of deaths and hospitalizations generally have trended down, Detrick noted.
Yet with the S& P 500 about 35% above its March 23 low, some analysts worry about a market that reflects far more optimism than seems warranted by data and corporate profits.