Wall Street's main indexes gained on Tuesday as healthcare stocks rallied, oil prices surged and a number of countries and U.S. states eased coronavirus-induced restrictions in an attempt to revive their economies.
Stocks pulled back sharply late in the session after Federal Reserve Vice Chair Richard Clarida made downbeat comments about the depth of the economic contraction.
Some hard-hit countries, including Italy, as well some U.S. states including California are tentatively easing lockdown orders this week, raising hopes for a recovery in oil demand.
Healthcare shares led among S&P 500 sectors following developments in efforts to control the coronavirus from Pfizer and Regeneron Pharmaceuticals.
“We are starting to see some states open up, we are starting to see some activity," said Paul Nolte, portfolio manager at Kingsview Investment Management. “We are probably now in the midst of the worst period and things will be gradually improving from here.”
The Dow Jones Industrial Average rose 133.33 points, or 0.56%, to 23,883.09, the S&P 500 gained 25.7 points, or 0.90%, to 2,868.44 and the Nasdaq Composite added 98.41 points, or 1.13%, to 8,809.12.
Shares of large tech and internet companies such as Microsoft and Apple also gained, giving lifts to the indexes.
Pfizer shares rose 2.4% after the drugmaker said it and its German partner had begun delivering doses of an experimental coronavirus vaccines for human testing. Regeneron Pharmaceuticals shares gained 6.0% after the company said its experimental antibody cocktail for COVID-19 may be available for use by the end of summer.
Stocks have rebounded sharply since late March from the coronavirus-fueled sell-off, helped by massive monetary and fiscal stimulus. Investors are now watching efforts by a number of states trying to spark their economies by easing restrictions put in place to fight the outbreak.
Clarida said during an interview with CNBC that the U.S. economy is likely to contract sharply during the second quarter as a result of intentional business shutdowns, but there is a chance the recovery could start in the second half of the year.
“Clarida threw a bit of a wet blanket on the market at the end of the session,” said Michael Antonelli, market strategist at Robert W. Baird in Milwaukee.
Data on Tuesday showed the vast U.S. services sector fell into contraction in April for the first time in nearly 10-1/2-years.
Investors are now bracing for data on the labor market through the week culminating with the employment report for the month of April due Friday.
"We have certainly gotten some negative data, but for the most part the market has learned to look through that," said Kristina Hooper, chief global market strategist at Invesco.
In corporate news, shares of Norwegian Cruise Line Holdings Ltd tumbled 22.6% as the world's third-largest cruise operator raised doubts about its ability to keep running as a business.
Advancing issues outnumbered declining ones on the NYSE by a 1.52-to-1 ratio; on Nasdaq, a 1.18-to-1 ratio favored advancers.
The S&P 500 posted 11 new 52-week highs and two new lows; the Nasdaq Composite recorded 46 new highs and 12 new lows.
About 10.6 billion shares changed hands in U.S. exchanges, below the roughly 12 billion daily average over the last 20 sessions.
A gauge of global stock markets rose, snapping a three-day losing streak, while oil prices soared as investors shrugged off grim economic data on hopes the easing of coronavirus lockdowns will jump start economies and revive fuel demand.
The dollar rose against most major currencies, bolstered by better-than-expected U.S. services data. The greenback's gains were also supported after U.S. President Donald Trump renewed verbal attacks on China, raising fears of a new trade war.
Oil prices surged, with U.S. crude futures rocketing 20% on hopes a recovery in vehicle traffic will boost fuel demand as some U.S. states, as well as countries in Europe and Asia, start to ease lockdowns. Risk appetite rose, lifting bond yields as gold prices fell.
"Continued talk about re-opening the economy and de-sheltering, that gives a lot of people hope the economy may recover sooner that some believe," said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.
"The market just seems to keep wanting to go up," he said.
Oil majors pushed the main stock indices higher across Europe, Canada and on Wall Street as Brent crude futures surged almost 14%. But Exxon Mobil Corp and Chevron Corp pared gains to lose their top spots on the Dow.
Royal Dutch Shell and BP Plc in London, Total in Paris, Eni SpA in Milan and Repsol in Madrid led their respective country indices higher, as did Cenovus Energy on Bay Street in Toronto.
"There is some hope that things are starting to get back to normal, and the rally in oil is helping put some confidence back in the markets," said Keith Temperton, a sales trader at Tavira Securities.
The pan-European STOXX 600 index rose 2.15% while MSCI's gauge of stocks across the globe gained 1.56%.
German shares lost some ground at one point after Germany's top court said the European Central Bank's bond purchasing program partially violates the constitution.
The euro and the region's government debt fell, too, though the court said the ECB program did not amount to monetary financing - in which a central bank bankrolls the government - which is banned in Germany. The ruling also did not apply to the bank's new coronavirus PEPP support program.
The euro slid 0.56% to $1.0845 and a sell-off in bond markets pushed Italy's ultra ECB-sensitive government yields up past 1.90% again.
The slide in the euro bolstered the dollar. The dollar index rose 0.259%, but the jump in oil meant the big petro currencies like Canada's dollar, Norway's crown and Russia's ruble were all stronger.
U.S. oil futures jumped 20%. West Texas Intermediate, the U.S. benchmark, rose $4.17 to settle at $24.56 a barrel. Brent futures added $3.77 to settle at $30.97, the first time since April 15 the international benchmarket rose above $30 a barrel.
Spot gold was up 0.2% at $1,705.57 per ounce at 2:05 p.m. EDT (1805 GMT). U.S. gold futures settled down 0.2% at $1,710.60.
© 2022 Thomson/Reuters. All rights reserved.