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MAY 26, 2020 / 5:19 pm
S&P 500 rises on economic recovery and vaccine hopes, pulls
back from highs
DJ: 24,465.16 -8.96 NAS: 9,324.59
+39.71 S&P: 2,955.45
+6.94 5/22
DJ: 24,995.11 +529.95 NAS: 9,340.22 +15.63 S&P: 2,991.77
+36.32 5/26
New York (Reuters) - U.S.
stocks closed higher on Tuesday on optimism about the development of
coronavirus vaccines and a revival of business activity, but the S&P 500
failed to hold above the key psychological level of 3,000 points. Stocks pared gains late in the session, after
Bloomberg News reported the Trump administration was weighing a range of
sanctions on Chinese officials, businesses and financial institutions,
reinforcing comments earlier in the day from White House adviser Larry Kudlow. Kudlow
said President Donald Trump was “so miffed with China on virus and other
matters that the trade deal is not as important to him as it once was.”
The benchmark S&P 500 .SPX had crossed 3,000 for the first
time since March 5 before dropping back late in the session. The S&P 500 has risen as much as
37.9% from its March 23 low due to central bank and government stimulus
at a time when the U.S. economy is seeing its biggest job losses since the
Great Depression of the 1930s. It closed 11.7% below its Feb. 19 record high.
On Monday, California, which has had one of the country’s most
restrictive shutdowns, said it would allow retail businesses to offer in-store
shopping and places of worship to reopen.
On top of vaccine-related news, Shawn Snyder, head of investment
strategy at Citi Personal Wealth Management, pointed to better-than-expected
home sales data and comments from JPMorgan Chase (JPM.N) CEO
Jamie Dimon. “When you add the news all
together everyone’s getting a boost,” Snyder said.
Data showed U.S. consumer
confidence nudged up in May, adding to hopes that the worst of the economic
impact of the shutdown is in the past.
The
Dow Jones Industrial Average .DJI rose 529.95 points, or 2.17%, to 24,995.11,
the S&P 500 .SPX gained 36.32 points, or 1.23%, to 2,991.77,
and the Nasdaq Composite .IXIC added 15.63 points, or 0.17%, to 9,340.22.
While all 11 S&P sector indexes were higher for much of the day, the
technology .SPLRCT and healthcare .SPXHC sectors ended slightly lower. Still,
sectors such as financials .SPSY and industrials .SPLRCI charged ahead with
gains of 5% and 4%, respectively.
A comment from JPMorgan’s Dimon suggesting that the bank may not need to increase its
reserves in the second half of the year was a boost for the financial
sector as well as the broader market, according to Citi’s Snyder. JPMorgan (JPM.N)
shares closed up 7%, making
it the biggest boost for the financial sector.
U.S. biotech group Novavax Inc (NVAX.O)
closed up 4.5% as it
joined the race to test coronavirus vaccine candidates on humans and
enrolled its first participants. Merck & Co Inc (MRK.N)
ended up 1.2% after it
announced plans to develop two separate vaccines. While macroeconomic data was pointing at a deep recession, Citi’s
Snyder was focused on the recovery. But he questioned how much further
the market would rise with the U.S. presidential election in November and
simmering U.S.-China tensions. “The
returns from here will be harder to come by,” he said.
Beaten-down travel-related stocks
climbed with the S&P 1500 airlines stocks index .SPCOMAIR rising 13% and
cruise operators including Carnival Corp (CCL.N),
which closed up 12.6%. The New York
Stock Exchange on Tuesday partially reopened its trading floors at the iconic
11 Wall Street building, which had been closed since March 23.
Advancing issues outnumbered declining ones on the NYSE by a
4.91-to-1 ratio; on Nasdaq, a 2.35-to-1 ratio favored advancers. The S&P 500 posted 13 new 52-week highs
and no new lows; the Nasdaq Composite recorded 104 new highs and nine new lows.
On U.S. exchanges 12.11
billion shares changed hands
compared with the 11.26 billion average for the last 20 sessions.
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