Wall St opens higher on hopes of economic recovery

Daniel Fowler
May 21, 2020

The Nasdaq Composite was up 155.35 points, or 1.69%, at 9,340.46. Australia's ASX 200 (^AXJO) was up by over 0.2%. South Korea's Kospi was up 2.2% to 1,980.07. Markets in Europe and Asia also rose. The report of early success from the Moderna vaccine candidate was one of the key catalysts for markets soaring a day ago.

Massachusetts-based Moderna saw its stock jump 20% in NY trading Monday.

The S&P 500 eked higher 4.04 points to 2,957.95. The gains erased all of its losses from last week, when the index posted its worst showing since late March and its third weekly loss in the past four.

In Europe markets closed higher, as Britain's FTSE-100 rose 1.08%, while France's CAC-40 climbed 0.87% and Germany's DAX gained 1.34%.

US Treasury Secretary Steven Mnuchin warned the US economy risks suffering "permanent damage" the longer the lockdown to contain the COVID-19 pandemic drags on. Once the outbreak has been contained, he said, the economy should be able to rebound "substantially".

At 9.57am ET, the Dow Jones Industrial Average was down 136.92 points, or 0.56%, at 24,460.45, the S&P 500 was down 5.92 points, or 0.2%, at 2,947.99, and the Nasdaq Composite was up 33.17 points, or 0.36%, at 9,268.00. The benchmark index is still down 12.8% from its all-time high on February 19. The Dow jumped 3.9% Monday in its biggest advance since April 6. Small-company stocks notched strong gains, another bullish signal.

The Russell 2000 index of small company stocks picked up 39.21 points, or 3%, to 1,346.93. In crowded cities it is hard to maintain social distancing.

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Technology, the only sector that's holding on to a gain for the year, accounted for much of the market's upward move. Shares in Marathon Oil slipped 4.4% after Moody's Investors Service said the outlook for the oil-and-gas company's credit rating was negative, citing low energy prices. Oil production cuts are kicking in at the same time that demand is rising as the USA and other countries ease some of the restrictions aimed at stemming the spread of the outbreak. Carnival Corp. jumped more than 14%, while Delta Air Lines and Live Nation Entertainment climbed more than 8%.

Crude oil futures gained 2.47% at $32.75 per barrel, Brent crude rose 0.98% at $35.63. Bond yields rose broadly in another sign that investors were becoming more optimistic.

The yield on the 10-year U.S. Treasury note slipped to 0.714%, from 0.741% Monday. On Tuesday morning it was at 0.70%.

The U.S. stock market has hovered in a relatively tight trading range for the past three weeks, with the S&P 500 largely staying between 2800 and 3000.

Investors are betting that the economy and corporate profits will begin to recover from the coronavirus pandemic as the US and countries around the world slowly open up again. But Monday's strong start to the week reversed all of the market's losses so far this month. However, concerns remain that the relaxing of stay-at-home mandates and the reopening of businesses could lead to another surge in infections, potentially ushering in another wave of shutdowns.

The U.S. dollar inched up to 107.38 Japanese yen from 107.31 yen on Monday.

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