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Wall Street Soars 7% on Hopes of Slowing Coronavirus Deaths

Wall Street Soars 7% on Hopes of Slowing Coronavirus Deaths
(Dreamstime.com)

Monday, 06 April 2020 04:07 PM

U.S. stocks rocketed higher on Monday, with each of the major indexes rallying at least 7%, after a fall in the daily death toll in New York, the country's biggest coronavirus hot spot, fueled optimism a leveling off of the pandemic was on the horizon.

On Sunday, New York reported virus-related deaths had fallen slightly from the previous day, the first instance in a week.

New York Governor Andrew Cuomo said on Monday that hospitalizations of coronavirus patients are down and the rate of the rise in deaths has leveled off in the hardest-hit state. But he cautioned against complacency.

"Seeing the market soar the way it is, even though the fundamentals continue to be in free fall, the market is looking across the valley and saying 'six months from now things will be on the ascent,'" said Sam Stovall, chief investment strategist at CFRA Research in New York.

"They are looking across the valley and seeing a lot of scary news but are basically saying 'We will get past this.'"

Even with the positive signs, U.S. officials have braced the country for a "peak death week" from the pandemic, with the death toll topping 10,000.

The Dow Jones Industrial Average rose 1,627.46 points, or 7.73%, to 22,679.99, the S&P 500 gained 175.03 points, or 7.03%, to 2,663.68 and the Nasdaq Composite added 540.16 points, or 7.33%, to 7,913.24.

The gains marked the biggest daily percentage rise for each index since March 24.

All 30 Dow components were in positive territory, led by a gain of 19.47% in Boeing shares, while the technology and defensive utilities sectors, among the best-performing for the year, climbed more than 8%.

The S&P 500 banking index jumped 8.21% and notched its best day in just over a week.

Wall Street's fear gauge fell to its lowest in two weeks, but remained at elevated levels. During the financial crisis of 2007-08, the S&P 500 took months to establish a bottom even after the volatility index plummeted.

Despite Monday's bounce, the S&P 500 remains down more than 21% from its mid-February record close.

S&P 500 companies are expected to enter an earnings recession in 2020, with declines in profit in the first and second quarters, according to IBES data from Refinitiv, as demand evaporates across sectors such as airlines, luxury goods and industrials. First-quarter expectations now call for an earnings decline of 6% from the year-ago period.

Versace owner Capri Holdings surged 25.9% after saying it expects to open its stores after June 1 and that it would furlough all its 7,000 employees in North America.

Video conferencing app Zoom fell 4.1% on concerns over its data-privacy practices and increased competition from deep-pocketed rivals.

Advancing issues outnumbered declining ones on the NYSE by a 8.09-to-1 ratio; on Nasdaq, a 5.68-to-1 ratio favored advancers.

The S&P 500 posted four new 52-week highs and no new lows; the Nasdaq Composite recorded 10 new highs and 34 new lows.

Volume on U.S. exchanges was 12.62 billion shares, compared with the 15.52 billion average for the full session over the last 20 trading days. 

GLOBAL MARKETS

World stock markets jumped, encouraged by a slowdown in coronavirus-related deaths and new cases in some global hot spots, oil prices tumbled again due to a delay in talks between Saudi Arabia and Russia to cut supply.

The U.S. dollar was little changed against a basket of peers while sterling turned negative versus the greenback and euro after news that UK Prime Minister Boris Johnson was moved to intensive care as he grew sicker with Covid-19.

Equities investors were encouraged by a slower death toll from the virus slowed across major European nations, including France and Italy.

In New York State, Governor Andrew Cuomo said that despite an increase in the number of cases and deaths, a daily decline in new hospitalizations and other data suggested a possible plateau in the crisis.

"It is definitely not going to be a one-way street but this potentially could be a turning point, we are starting to get some good news and hopefully that trend will continue," said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.

"But that is not to say it is going to be a smooth path. We all know from the recovery we experienced after the 2008 financial crisis there is always a potential for a negative development to cause the market to pull back again."

U.S. officials have braced the country for a "peak death week" from the pandemic, with the death toll topping 10,000.

The economy will still feel effects of the measures taken to slow the spread of the virus. Investor morale in the euro zone fell to an all-time low in April and the currency bloc's economy is in deep recession due to the coronavirus, which is "holding the world economy in a stranglehold," a Sentix survey showed.

"Never before has the assessment of the current situation collapsed so sharply in all regions of the world within one month," Sentix Managing Director Patrick Hussy said.

Still, markets appeared hopeful.

"What is driving the market is the evidence that the number of new cases has started to turn the corner," said Elwin de Groot, Rabobank's head of macro strategy.

The pan-European STOXX 600 index rose 3.73% and MSCI's gauge of stocks across the globe gained 4.95%.

Emerging market stocks rose 2.56%. MSCI's broadest index of Asia-Pacific shares outside Japan closed 2.78% higher, while Japan's Nikkei rose 4.24%.

"This still looks like a case of over-optimism," said Marios Hadjikyriacos, investment analyst at online broker XM.

"A lot of uncertainty is still in the air and there is no clear timeline for when any of these economies will be reopened, which is the most important variable for markets."

Markets in mainland China were closed for a public holiday.

OIL RESUMES DECLINE

U.S. crude dropped sharply following two sessions of double-digit gains after Saudi Arabia and Russia, at odds over production, postponed a meeting of the Organization of the Petroleum Exporting Countries and its allies, or OPEC+, until Thursday instead of Monday.

"Perhaps it is best that the meeting was delayed for producers to cement a minimum of common ground before the actual discussions take place on Thursday," BNP Paribas analyst Harry Tchilinguirian said.

Kremlin spokesman Dmitry Peskov said Moscow was ready to coordinate with other oil exporting countries to help stabilize the market and the OPEC+ meeting was delayed for technical reasons.

The market was weighed down by a report from data provider Genscape that inventories at the Cushing storage hub in Oklahoma, the delivery point for WTI, rose by about 5.8 million barrels last week, traders said.

U.S. crude recently fell 7.41% to $26.24 per barrel and Brent was at $32.98, down 3.31% on the day.

JAPAN IN STATE OF EMERGENCY

In currency markets, the yen weakened 0.60% versus the greenback at 109.16 per dollar and weakened against other major currencies as Japanese Prime Minister Shinzo Abe said the government would declare a state of emergency as early as Tuesday to curb a spike in coronavirus infections.

The dollar gained ground against the euro while the pound slipped after news of Johnson's move to the ICU.

The euro was down 0.15% to $1.0792 and Sterling was last trading at $1.2237, down 0.19% on the day.

The dollar index fell 0.01%.

Yields on safe-haven U.S. government bonds crept higher in fixed income markets, reflecting the slightly brighter tone in world stock markets.

Lou Brien, a strategist at DRW Trading in Chicago, said Wall Street's upward trajectory was "the first and last reason why Treasuries are lower in price and higher in yield this morning."

Benchmark 10-year notes last fell 25/32 in price to yield 0.6666%, from 0.589% late on Friday. The 30-year bond last fell 1-17/32 in price to yield 1.2705%, from 1.216%.

Despite the stocks rally, gold prices touched a more than three-week high. Spot gold added 3.0% to $1,664.87 an ounce.

© 2020 Thomson/Reuters. All rights reserved.


   
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U.S. stocks rocketed higher on Monday, with each of the major indexes rallying about 7%, after a fall in the daily death toll in New York, the country's biggest coronavirus hot spot, fueled optimism a leveling off of the pandemic was on the horizon.
stock, market, wall street, dow, s&p 500, coronavirus
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2020-07-06
Monday, 06 April 2020 04:07 PM
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