Stocks vault higher on hopes for econ­omy

Wall Street ral­lies as states re­lax re­stric­tions; Nasdaq hits a record

Richmond Times-Dispatch - - BUSINESS -

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

The broader S&P 500 is up slightly for the year and back within 4.5% of its own record as op­ti­mism strength­ens that the worst of the re­ces­sion may have 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 on 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 on 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 very 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. He’s still far from giv­ing the all-clear.

“There’s a lot of risk that busi­nesses and the econ­omy don’t re­cover as fast,” he said. “When money starts run­ning out in

July, are we enough on a path to get­ting peo­ple em­ployed and busi­nesses open?”

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, but will the re­cent up­turn in job growth mean it will pull back at all?

Trea­sury yields have been climb­ing in re­cent days, re­flect­ing ris­ing ex­pec­ta­tions in the mar­ket for the econ­omy and in­fla­tion. The 10-year Trea­sury is up to 0.87% from 0.66% a week ear­lier.

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