Dow Jumps 300 Points As Wall Street Bets On A Successful Reopening Of The Economy
by Sergei KlebnikovTOPLINE
The market continued to rally on Wednesday as optimism about a successful reopening of the economy and a potential coronavirus vaccine continues to build on Wall Street.
KEY FACTS
The Dow Jones Industrial Average rose 1.2%, over 300 points, at Wednesday’s open, while the S&P 500 was up 0.9% and the Nasdaq gained 0.1%.
The European Commission announced plans on Wednesday for a $826.5 billion recovery fund to help deal with the economic fallout from the coronavirus pandemic.
Stocks have been moving higher thanks to increasing optimism on Wall Street, with states beginning to reopen businesses and several companies working on potential coronavirus vaccines.
Earlier this week, biotech company Novavax said that it had started the first clinical trial for its experimental coronavirus vaccine, while pharmaceutical giant Merck announced that it is working with scientific research organization IAVI to develop a vaccine.
Stocks that would benefit from a reopening jumped again on Wednesday, including cruise operators such as Carnival and Norwegian Cruise Line, airlines like United and American, and retailers Gap and Kohl’s.
Economic data released Tuesday also helped boost market confidence: Consumer confidence jumped by more than expected to 86.6 this month, up from 85.7 in April, and new home sales last month also topped estimates.
Crucial quote
“The stock market is pricing in a faster than expected recovery,” according to Andrew Smith, chief investment strategist at Delos Capital Advisors. “We expect further volatility as the economy starts to reopen,” he says, adding that his firm has tilted out of defensive sectors like consumer staples and utilities and into sectors tied to economic rebounds, such as financials and industrials.
What to watch for
Rising U.S.-China tensions. Many experts are worried about a derailment of the phase one trade deal—something Trump has repeatedly threatened to do. White House National Security Advisor Robert O’Brien said last Sunday that the U.S. is likely to impose sanctions on China if the country follows through with a new national security law that would give it greater control over Hong Kong.
Further reading
Dow Surges 500 Points As Investors Bet On A Coronavirus Vaccine Breakthrough (Forbes)
Here Are 13 Stocks That Both Hedge Funds And Mutual Funds Are Buying Up (Forbes)
These 10 States Have The Highest Record Unemployment Rates (Forbes)