USA stocks rise to begin June on 2-week win streak

Daniel Fowler
June 2, 2020

That helped financial stocks.SPSY, which tend to perform better when the outlook for the economy improves, power ahead, providing the biggest boost to the S&P 500.SPX.

In Asia, Hong Kong's benchmark stock index led the region's markets higher, signaling investors' relief that Mr. Trump had refrained from definitive steps targeting the city or mainland China.

American Airlines stock gained 5.81 percent, United grew 5.06 percent and Delta gained 3.81 percent.

The S&P 500 index was up 1.59 points at 3,045.90, while the Nasdaq composite was up 20.56 points at 9,510.43.

Investors largely seemed to discount the clashes between police and civilians in the the worst civil unrest in decades erupted in American cities this weekend. The Dow and S&P 500 gained 4.3% and 4.5%, respectively, for May while the Nasdaq Composite advanced 6.8%. The reopening is now taking place amid widespread protests across the US over police brutality.

The move comes after U.S. President Donald Trump said on Friday he was directing his administration to begin the process of eliminating special treatment for Hong Kong, ranging from extradition treatment to export controls, in response to China's plans to impose new security legislation in the territory.

Data showed China's manufacturing activity expanded in May.

George Floyd protests spread despite USA curfews
National Guard units also were mobilized by the governors of Ohio, Missouri, Wisconsin and Tennessee. At a late-night news conference, New York Mayor Bill de Blasio suggested protesters were to blame.

"This optimistic read for risk can only persist if measures like orders and employment continue to improve month to month", said Alan Ruskin, chief global strategist at Deutsche Bank. "We've seen this all before, going back to the civil protests in the 1960s", said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Markets are boosted by relief that the US hasn't taken tougher measures, which could potentially have devastated the Hong Kong economy and had wider regional effects, according to Alex Au, managing director at Alphalex Capital Management, a hedge fund based in Hong Kong.

Wall Street's major indexes rose on Monday as investors chose to look past violent protests across the country over racial inequality and focused more on economic data that bolstered views of a quick post-pandemic recovery. The Dow gained 11% in April.

Peter Berezin, chief global strategist at BCA Research, wrote: "The main downside risk facing stocks is a second wave of the disease".

Berezin added, however, that he recommends a "modest overweight" portfolio allocation to stocks, noting: "Even if a vaccine does not become available later this year, increased testing should allow for a more economically palatable approach to containment strategies".

More than 6 million cases of coronavirus have been confirmed around the world, including more than 1.7 million in the U.S. However, Novavax said last week is started Phase 1 clinical trials for its coronavirus vaccine candidate while Moderna said May 18 its early stage vaccine trial had yielded positive results.

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