Dow Closes Above 25,000 For First Time Since March
by Sergei KlebnikovTOPLINE
The stock market finished higher on Wednesday, with the Dow and S&P 500 both clearing critical milestones as investors cheered a reopening of the economy and a potential coronavirus vaccine.
KEY FACTS
The Dow Jones Industrial Average rose 2.2%, over 500 points, on Wednesday, while the S&P 500 was up 1.5% and the tech-heavy Nasdaq gained 0.8%.
The Dow closed above 25,000 and the S&P broke 3,000, both for their first time since March—showing the market’s recovery from the coronavirus downturn.
The market has been moving higher thanks to increasing optimism on Wall Street, with states beginning to reopen businesses and several companies working on potential coronavirus vaccines.
Investors rotated out of stocks that benefited from stay-at-home orders, such as Zoom and Shopify. Those that would benefit from an economic reopening jumped on Wednesday, including cruise stocks, airlines, banks and even some retailers.
Adding to the good news: 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.
Tech stocks lagged for most of Wednesday, with the likes of Facebook, Amazon, Apple, Netflix and Google-parent Alphabet all losing ground before paring back some of their losses.
Crucial quote
“The stock market is pricing in a faster than expected recovery,” says 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. Secretary of State Mike Pompeo told Congress on Wednesday that Hong Kong is no longer “politically autonomous” from China. Not only does that threaten U.S.-China trade, it could also result in new sanctions on Chinese officials.
Tangent
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.
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)
Goldman Sachs GSBD Forecasts Unemployment To Peak At 25%, Remain High For Next Two Years (Forbes)
These 10 States Have The Highest Record Unemployment Rates (Forbes)