U.S stocks rose Tuesday, but were off the session highs by midday, as the market extended a rally to a second session on growing signs that the spread of the COVID-19 pandemic may be leveling off in parts of the world.
Markets also were encouraged by reports of further planned U.S. measures to help dampen the recessionary impact of shutdowns and business closures intended to limit the epidemic.
How are indexes performing?
The Dow Jones Industrial Average DJIA, +3.03% rose 725 points, or 3.2%, to reach 23,401, the S&P 500 index SPX, +2.67% gained 73 points, or 2.7%, at 2,736, while the Nasdaq Composite index COMP, +2.08% advanced 167 points, or 2.1%, to reach 8,078.
At session highs early Tuesday, the Dow had gained 937.25 points, or 4.1%, the S&P 500 93.21 points, or 3.5% and the Nasdaq 233.20 points, or 2.9%.
On Tuesday, the Dow rose 1,627.46 points, or 7.7%, its third biggest daily gain ever, to finish at 22,679.99. The S&P 500 climbed 175.03 points, or 7%, to end at 2,663.68, its highest level since March 13. The Nasdaq Composite surged 540.15 points, or 7.3%, to close at 7,913.24.
As of Tuesday afternoon, all three benchmarks had recovered more than 20% from their 52-week low on March 23.
What’s driving the market?
Eagerness to buy beaten-down stocks took hold for a second straight session on Wall Street, as investors focused on signs of a slowdown in new daily deaths and infections from COVID-19, the deadly disease that was first identified in Wuhan, China in December.
Italy reported the lowest number of new coronavirus infections in nearly three weeks, after China reported no new deaths, though deaths in Spain rose after declining for four consecutive days.
“It appears we’re hitting the worst of this wave of the coronavirus,” Mike Dowdall, investment strategist at BMO Global Asset Management told MarketWatch. “It’s too early to call the all-clear in the U.S., but the most dire scenarios we were looking at a week or two ago appear to be avoided for now.”
Reports also suggested that U.S. lawmakers are hashing out a so-called Phase 4 relief package for next month that could be worth more than $1 trillion, to help prop up the economy and assist workers and small companies, according to Bloomberg.
Republican Sen. Marco Rubio of Florida also said Tuesday that a bipartisan effort for additional coronavirus aid for small businesses could be put to a vote Thursday, potentially expanding aid to employers and their workers during the shutdown.
These factors have offered some guarded optimism to bullish investors still wrestling with fallout from the pandemic, which has pushed domestic and international economies into recession.
“We certainly are not complaining that the market is rebounding,” said Adam Phillips, director of portfolio strategy at EP Wealth Advisors in Los Angeles, but he cautioned that questions linger as to if the rally can be sustained.
“We are seeing progress, but the virus is not under control yet,” he told MarketWatch. “The economy data still remains at the mercy of the virus.”
Globally, the number of confirmed cases of COVID-19 rose to more than 1.35 million, spreading across more than 100 countries, while deaths topped 74,800, according to data aggregated by Johns Hopkins University. There are more than 368,000 confirmed cases in the U.S. and almost 11,000 deaths, with New York reporting 731 deaths, its highest daily rate yet. Japan also declared a state of emergency, as expected, in seven of its prefectures to help direct resources to slowing the spread of the illness.
In U.S. economic news, the NFIB survey, a monthly snapshot of small businesses, found that the optimism index fell in March to 96.4, an 8.1-point decline and the largest monthly decline in the survey’s history.
The survey data come just a week after the U.S. government’s rolled out a coronavirus-rescue package, known as the CARES Act, which included $350 billion in forgivable loans for small businesses.
Which stocks are in focus?
- Shares of Carnival Corp. CCL, +19.00% were rising again Tuesday. The cruise-ship operator’s stock was up 19%, following a 21% Monday rise, after Saudi Arabia’s sovereign wealth fund disclosed an 8.2% stake in the firm. However, shares have fallen roughly 80% year-to-date. Rivals Norwegian Cruise Lines Holdings Ltd. NCLH, +15.38% and Royal Caribbean Cruises Ltd. RCL, +21.51% were also sharply higher early Tuesday.
- Beaten-down airline stocks also traded higher Tuesday, with shares of Delta Air Lines Inc. DAL, +5.22%, American Airlines Group Inc. AAL, +17.96%, and United Airlines Holdings Inc. UAL, +9.25% all up more than 7%.
- Exxon Mobil Corp. XOM, +5.31% said Tuesday that it was reducing its 2020 capex spending by 20% and lowering its cash operating expenses by 30% to combat the effects of lower oil prices.
- AT&T Inc. T, +4.12% announced a $5.5 billion term-loan agreement to further insulate it from an economic slowdown and that it expects to keep paying its dividend.
- Kohl’s Corp. KSS, +24.73% shares were on track for their biggest one-day gain ever. They were up 27.6% in afternoon trade.
- Shares of Wayfair, Inc. W, +8.49% gained 7.5% after an upgrade to buy from neutral at BofA Securities and a price target boost to $103 from $89.
How are other markets trading?
In bond markets, the yield on the 10-year U.S. Treasury note TMUBMUSD10Y, 0.778% rose about 10.5 basis points to 0.78%.
Crude oil prices were moving higher, with the price of a barrel of West Texas Intermediate crude for May delivery CLK20, -0.84% trading 25 cents, or 0.9%, higher at $25.85 a barrel. In precious metals, the price of an ounce of gold for June delivery GCM20, -0.38% fell $6.80, or 0.4%, to trade at $1,687.10 an ounce.
The U.S. dollar fell 0.8% relative to a basket of trading peers, according to the ICE U.S. Dollar DXY, -0.74%
In Europe, stocks were trading higher, with the Stoxx Europe 600 SXXP, +1.88% gaining 1.9%.
In Asia overnight, stocks closed significantly higher. The China CSI 300 000300, +2.28% rose 2.3%, Hong Kong’s Hang Seng index HSI, +2.12% added 2.1% and Japan’s Nikkei 225 NIK, +2.01% rose 2%.
Chris Matthews contributed reporting
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