Stocks vault higher on economic recovery hopes

Nasdaq sets a record after erasing virus-induced losses

NEW YORK — Wall Street’s enthusiasm about the reopening economy sent stocks scrambling even higher Monday, and the Nasdaq composite wiped away the last of its coronavirus-induced losses to set a record.

The S&P 500, which dictates how more 401(k) accounts perform, climbed back within 4.5% of its own record as optimism strengthens that the worst of the recession may have already passed. Stocks that would benefit most from an economy that’s growing again rose the most, including smaller companies, airlines and oil producers.

The S&P 500 rallied 38.46 points, or 1.2%, to 3,232.39 and is at its highest level since February, which a panel of economists said Monday is the month when the recession officially began. That’s when employment set a peak before tumbling after businesses shut down across the country to slow the outbreak.

The Dow Jones Industrial Average rose 461.46, or 1.7%, to 27,572.44. The Nasdaq composite, which is more heavily weighted to the big technology stocks that held up the best earlier this year, gained 110.66, or 1.1%, to 9,924.74.

Stocks have been rising since late March, at first on relief after the Federal Reserve and Capitol Hill pledged to support the economy and more recently on hopes that the recovery may happen more quickly than forecast.

Those hopes got a huge boost Friday when the U.S. government said that employers added 2.5 million jobs to their payrolls last month. Economists were expecting to see 8 million more lost.

States across the country are slowly relaxing restrictions on businesses meant to slow the spread of the coronavirus outbreak, which is raising expectations that the economy can pull out of its coma. New York City, which has been the country’s hardest-hit, began allowing retailers and some other businesses to reopen Monday with some restrictions.

That puts more scrutiny on economic reports this week as investors look for confirmation that Friday’s jobs report was a true inflection point and not just an aberration.

Even if the economy did hit its bottom a month or two ago, economists warn that many risks are still looming over a long road back to full recovery.

Critics are also still saying the stock market may have risen too quickly and may be setting investors up for disappointment, with the biggest risk being another wave of infections that leads to more lockdowns.

“It all starts with the virus itself, and there haven’t been any immediate rise in infections,” said Tom Martin, senior portfolio manager at Globalt Investments.

Among this week’s economic highlights are reports on inflation and the number of workers applying for jobless benefits. The headliner, though, is likely the Federal Reserve’s meeting on interest rates in the middle of the week.

The Fed has already promised unprecedented amounts of support to keep markets running smoothly.