MAY 26 — US stocks jumped and the S&P 500 breached 3,000 points on Tuesday as optimism about a potential coronavirus vaccine and a revival in business activity helped investors overlook simmering Sino-US tensions.
The benchmark index traded above the key psychological level and also above its 200-day moving average, a closely watched long-term trend indicator, for the first time since March 5.
All 11 S&P sector indexes gained in early trading, with cyclical financials, industrials and energy stocks jumping more than 3 per cent.
The S&P 500 has risen about 37 per cent from its March lows on a raft of central bank and government stimulus, and is now just about 11 per cent below its February record high.
On Monday, California decided to reopen in-store retail businesses and places of worship from one of the most restrictive shutdowns in the United States.
“People have been locked up and when they see sparkles of hope like vaccines, that drives optimism probably ahead of where it should be and clearly ahead of the economy,” said Richard Steinberg, chief market strategist at Colony Group in Florida.
At 10:01 a.m. ET, the Dow Jones Industrial Average was up 575.66 points, or 2.35 per cent, at 25,040.82, the S&P 500 was up 54.53 points, or 1.85 per cent, at 3,009.98, and the Nasdaq Composite was up 126.77 points, or 1.36 per cent, at 9,451.36.
US biotech group Novavax Inc jumped 17.3 per cent as it joined the race to test coronavirus vaccine candidates on humans and enrolled its first participants.
Merck & Co Inc added 1.5 per cent as it announced plans to develop two separate vaccines.
But with US unemployment soaring beyond 14 per cent and macroeconomic data pointing at a deep recession, analysts warned financial markets could be betting on too fast a recovery.
“Business cycles don’t simply end in two to three months – in a way that’s what some of these sectors are pricing. It’s going to be very slow,” said Patrick Fruzzetti, managing director and senior research analyst at the Rosenau Group.
Beaten down travel-related stocks soared, with S&P 1500 airlines index up 10.3 per cent and cruise operators including Carnival Corp more than 12 per cent.
Advancing issues outnumbered decliners more than 9-to-1 on the NYSE and 5-to-1 on the Nasdaq.
The S&P index recorded 13 new 52-week highs and no new low, while the Nasdaq recorded 83 new highs and four new lows. — Reuters
