Wall Street Jumps 3.4% 04/08 15:52
Stocks shot to a 3.4% gain on Wall Street Wednesday as investors chose to
focus on the optimistic side of data about the coronavirus outbreak's
NEW YORK (AP) -- Stocks shot to a 3.4% gain on Wall Street Wednesday as
investors chose to focus on the optimistic side of data about the coronavirus
It's the latest about-face in this brutally volatile stretch for the U.S.
stock market, which has flip-flopped from gains to losses for six straight
days. Just a day before, stocks had been headed for a similar gain only for it
to disappear 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. Some investors are envisioning 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% since
hitting a low two and a half weeks ago, 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 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%, to 2,749.98. It closed roughly
where it was about 30 hours earlier. The S&P 500 had been heading for an even
bigger gain on Tuesday, but a 3.5% rise suddenly vanished in the afternoon.
For some investors, the index's 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 rose 779.71 points, or 3.4%, to 23,433.57
and the Nasdaq was up 203.64, or 2.6%, to 8,090.90.
Stocks that have been beaten down the most since the sell-off began in
February led the way, including energy companies, retailers and travel-related
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 so far.
Shares of health insurers and other stocks got 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
UnitedHealth rose 8% after being down in the morning, and Anthem jumped
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, according to 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 anywhere from 13% to 32% this year.
The wide range was due to how unpredictable the pandemic is.
Companies are also preparing to report their financial results for the first
three months of the year in upcoming weeks. The numbers are likely to be bleak,
but investors don't know how long that will last. McDonald's on Wednesday
pulled its forecast for restaurant growth and other measures for 2020 and the
long term, citing the uncertainty created by the pandemic.
In Europe, stocks dipped after finance ministers clashed over a proposal to
collectively combat the health crisis. Countries that have been hardest hit by
COVID-19 are also among those that can least afford to pay for it, such as
Italy and Spain. But the outbreak is dragging on economies across the
continent. German economists predict its economy will shrink 4.2% this year.
Asian markets ended mixed.
Benchmark U.S. crude oil rose $1.46, or 6.2%, to settle at $25.09 a barrel,
recovering some of its 9.4% slide from the prior day. Oil prices have been even
more volatile than stocks recently as Russia and Saudi Arabia argue about
whether to cut production in the face of withering demand. Oil producers are
set to meet on Thursday, and an announcement for production cuts to prop up the
price of crude is possible.
Brent crude oil, the international standard, rose 97 cents, or 3%, to $32.84
Treasury yields, which signaled worries about the economic damage coming
from the coronavirus outbreak earlier than the stock market, were relatively
steady. The yield on the 10-year Treasury rose to 0.76% from 0.73% late Tuesday.
More than 1.4 million cases of COVID-19 have been confirmed around the
world, with more than 419,000 of them in the United States. More than 87,000
people have died from the virus, while over 317,000 have recovered, according
to a tally by Johns Hopkins University.