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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowStocks rose Wednesday as investors brushed off a report questioning a coronavirus vaccine candidate and focused on signs that the reopening of the global economy is gathering momentum.
The Dow Jones industrial average jumped 300 points at the opening bell and never looked over its shoulder, extending its gain to 369 points, or 1.5%, to finish at 24,575.90. Energy stocks were a big winner, with Chevron and ExxonMobil surging around 3%. Walt Disney and American Express, both of which stand to benefit from an economic reopening, paced the blue chips through the day.
“There are green shoots all over the place showing the economy might have bottomed,” said Ivan Feinseth of Tigress Financial Partners.
Retailers Target and Lowe’s reported better-than-expected first quarter results on Wednesday. Weekly mortgage applications reported on Wednesday point to a strong recovery in that sector. Airlines have said bookings are up, gasoline usage is increasing as more cars take to the road. And the Federal Reserve this week reiterated its pledge to do what it takes to prevent a depression.
The Standard & Poor’s 500 index gained 49 points, or 1.7%, as all 11 stock market sectors advanced. The broad index finished at 2,971.61 on the day. The Nasdaq composite bolted 2.1% higher, or 190 points, to end at 9,375.78 as Amazon and Facebook hit all-time highs. (Amazon founder Jeff Bezos owns The Washington Post.)
Stocks have been volatile all week as news on coronavirus vaccines, economic milestones, politics and earnings buffet investor sentiment.
The blue-chip index saw a last-minute slide Tuesday after a Stat news report suggested Moderna hadn’t produced enough critical data in its first human trial. The biotech company announced that its treatment successfully produced COVID-19 antibodies in participants, which helped propel the Dow’s 911-point rally on Monday.
“Investors are pretty much convinced that a vaccine for COVID-19 will be found over the next year, and whether it is Moderna’s or another one will not change the outlook for equities,” Ed Moya, an analyst with OANDA, wrote in commentary Wednesday. “Right now the biggest risk to the stock market is if we start to see massive spikes of new coronavirus cases with states that were early to reopening.”
The strong earnings from Target and Lowe’s reassured investors. Target handily beat analyst expectations for revenue and earnings per share, with digital sales driving a 10.8% jump in same-store sales. Its shares rose 2.5% in premarket trading. Home improvement retailer Lowe’s shares climbed 7% after its sales and revenue significantly beat expectations. But Lowe’s revoked its year-end guidance amid coronavirus uncertainty despite its strong second quarter performance—just as Walmart did on Tuesday.
Oil continued its recovery Wednesday as gradual steps toward normalcy put more people in motion, trimming a global oil glut that sent prices to record lows last month. Brent crude, the international benchmark, was up nearly 2.4% to trade at $35.44 a barrel. West Texas Intermediate crude, the U.S. benchmark, climbed 2.2% to $32.66 a barrel.
Federal Reserve Chair Jerome H. Powell and Treasury Secretary Steven Mnuchin painted conflicting pictures of the road to economic recovery Tuesday. The two main architects of the government’s economic response to the pandemic appeared before the Senate Banking Committee.
Mnuchin echoed the Trump administration’s rosy view of the situation, but emphasized the urgency of lifting lockdown restrictions to avoid “permanent damage” to the economy. Powell warned that more government support will be needed and highlighted the importance of tackling the public health crisis before the economy can regain its footing.
“Ultimately we are looking at a drawn out recovery, and the consolidation we have seen for stocks over recent weeks serves to highlight that another surge may not necessarily be justified given how elevated pricing is compared with forward earnings,” Joshua Mahoney, senior market analyst at IG, said in comments emailed to The Washington Post.
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