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Dow Surges 527 Points Surges on Signs of Economic Rebound

Dow Surges 527 Points Surges on Signs of Economic Rebound
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Wednesday, 03 June 2020 04:10 PM

Wall Street rallied broadly on Wednesday with the Nasdaq approaching record highs as signs of an economic recovery from mandated shutdowns helped investors look beyond U.S. social unrest and pandemic worries.

Financials, industrials and tech pushed the three major U.S. stock indexes well into the black. The S&P 500 and the Nasdaq each posted their fourth straight day of solid gains.

The Nasdaq, the S&P 500 and the Dow have rebounded sharply from March lows hit as coronavirus-related lockdowns shocked the stock market, and they are now 1.4%, 7.8%, and 11.1%, respectively, away from overtaking all-time closing highs set in February.

The Nasdaq 100 is now just over 0.1% below its February record, having briefly breached that level late in the session.

"There is growing confidence the U.S. economy can safely re-open, much as other economies such as China and Italy have successfully done," said David Carter, chief investment officer at Lenox Wealth Advisors in New York. "Risk appetite for equities has been helped by optimism in the economy, as well as investors having few other alternatives."

Nationwide protests over the death of an unarmed black man in police custody extended to an eighth night as protesters ignored curfews, but violence subsided after President Donald Trump threatened to deploy the military.

A spate of grim economic data was not as bad as economists feared, with ADP reporting many fewer private-sector job cuts in May than expected.

Market participants now await the U.S. Labor Department's more comprehensive May jobs report, which is expected to show unemployment soaring to a historic 19.7%.

The Dow Jones Industrial Average rose 527.24 points, or 2.05%, to 26,269.89, the S&P 500 gained 42.05 points, or 1.36%, to 3,122.87 and the Nasdaq Composite added 74.54 points, or 0.78%, to 9,682.91.

Of the 11 major sectors in the S&P 500, all but healthcare closed in positive territory, with industrials and financials enjoying the biggest percentage gains.

Boeing Co gave the biggest boost to the blue-chip Dow, its shares rising 12.9% following news that billionaire investor Daniel Loeb's Third Point had taken a stake in the company.

Lyft Inc jumped 8.7% after the ride-sharing platform reported rides increased 26% in May.

Microchip Technology Inc surged 12.3% after the chipmaker raised its forecast for current-quarter sales and profit.

Teleconferencing firm Zoom Communications Inc nearly doubled its annual sales expectations, but also reported a sharp rise in costs. Its shares were up 7.6%.

Cosmetics maker Coty Inc rose 13.4% after announcing it was in talks to collaborate on a beauty line with reality TV star Kim Kardashian West.

Campbell Soup Co beat earnings expectations and hiked its full-year forecast, but troubles meeting surging consumer demand sent its shares down 6.1%.

Advancing issues outnumbered declining ones on the NYSE by a 3.81-to-1 ratio; on Nasdaq, a 2.26-to-1 ratio favored advancers.

The S&P 500 posted 32 new 52-week highs and no new lows; the Nasdaq Composite recorded 96 new highs and four new lows.

Volume on U.S. exchanges was 12.62 billion shares, compared with the 11.45 billion average over the last 20 trading days.

GLOBAL MARKETS

 Global equity markets rallied and the euro rose against the dollar on Wednesday, both for a seventh straight session, indicating strong risk appetite as easing lockdowns and hopes for more monetary stimulus boosted investor confidence.

Investors shed safe-haven assets such as gold and government debt on encouraging economic data from China and hopes the worst of the downturn stemming from the coronavirus crisis is over.

Gold prices extended losses as MSCI's all-country world index, a gauge of equity markets in 49 countries, surged to its highest since March 6, while Germany's benchmark 10-year Bund yield hit its highest since mid-April.

U.S. gold futures fell $27.40 to settle at $1,697.80 an ounce, the first time bullion has traded below $1,700 in a week.

The euro rose 0.6% to $1.1236 and has gained more than 3% since May 25.

Copper hit its highest since March, buoyed by the prospect of higher demand from top consumer China after its services sector returned to growth in April for the first time since January, a private survey showed.

The dollar slid to an 11-week low against a basket of currencies but strong equity gains set the tone of investor optimism, as leading bourses in Paris and Frankfurt rose more than 3% and the Dow rose 2% as Boeing shares surged.

Stocks are an important risk indicator that continue to surprise on the upside and push investors who have been on the sidelines into the market, Marvin Loh, senior global macro strategist at State Street Global Markets in Boston.

"The fact that you got this broad-risk indicator that's stable, and in a lot of ways is defying a lot of the well-known critics out there in terms of continuing to march higher, is pulling other people into the market," Loh said.

MSCI's gauge of stocks across the globe gained 1.67% while the pan-European STOXX 600 index rose 2.54%. MSCI's all-country world index is less than 9% from it's all-time peak set in February.

Euro zone businesses suffered another contraction in activity in May. While there are signs the worst is over, it could be months before there is a return to growth, a survey showed.

But broader economic optimism supported risk-sensitive currencies and pushed down the dollar.

Oil retreated after briefly jumping above $40 a barrel, the highest since March, as doubts emerged about the timing and scale of a potential extension to the pact between the Organization of the Petroleum Exporting Countries and its allies to cut crude supplies.

U.S. crude rose 48 cents to settle at $37.29 a barrel. Brent settled up 22 cents at $39.79 a barrel.

The dollar index fell 0.284% while the Japanese yen weakened 0.23% versus the greenback to 108.95 per dollar.

Germany's 10-year government bond yield rose to its highest since mid-April as the global risk-on mood saw demand for safer debt decline, but then slipped back slightly to -0.399 by 1100 GMT.

The European Central Bank is expected to ramp up stimulative bond purchases when it meets on Thursday.

Benchmark 10-year notes rose 7.7 basis points to yield 0.7573%.

© 2020 Thomson/Reuters. All rights reserved.


   
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Wall Street jumped in a broad rally on Wednesday, closing ground on all-time highs as signs of recovery from mandated economic shutdowns helped investors look beyond ongoing social unrest and pandemic woes.
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2020-10-03
Wednesday, 03 June 2020 04:10 PM
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