Stocks Rise on Vaccine Hopes 07/15 16:22
Markets worldwide rallied on rising hopes for a COVID-19 vaccine Wednesday,
and the S&P 500 climbed back to where it was a few days after it set its record
early this year.
NEW YORK (AP) -- Markets worldwide rallied on rising hopes for a COVID-19
vaccine Wednesday, and the S&P 500 climbed back to where it was a few days
after it set its record early this year.
Investors see a vaccine as the best way for the economy and human life to
get back to normal, and researchers said late Tuesday that one developed by the
National Institutes of Health and Moderna revved up people's immune systems in
early testing, as hoped. The S&P 500 rose 0.9% to pull within 4.7% of its
all-time high set in February.
The Dow Jones Industrial Average climbed 227.51 points, or 0.9%, to
26,870.10, and the Nasdaq composite gained 61.91, or 0.6%, to 10,550.49. During
the morning, the S&P 500 touched its highest level since Feb. 25, and it ended
the day at 3,226.56, up 29.04.
Several things helped lift the market, including stronger-than-expected
reports on the economy and on corporate profits from Goldman Sachs and others.
But the vaccine hopes were at the center of the rise, which meant the market's
leaderboard was dominated by companies that would benefit most from a return to
normal life. They included cruise-ship operators, airlines, retailers and hotel
Stocks of smaller companies also leaped much more than the rest of the
market, an indication of rising expectations for the economy. The Russell 2000
index of small-cap stocks jumped 3.5%, a turnaround from earlier months when
big, tech-oriented companies were carrying the market.
"Investors are gaining more confidence of the longer-term direction of the
market," said Sam Stovall, chief investment strategist at CFRA. "It's not just
the behemoth tech stocks that are likely to lead share prices higher, but that
mid- and small-cap stocks will also benefit, not only from an economic
recovery, but also from very low interest rates."
Winners of the stay-at-home economy created by quarantines and lockdowns,
meanwhile, lagged behind. Clorox, Netflix and Amazon all fell.
Wednesday's lift for markets, though, came only after another day of choppy
trading. The S&P 500 shot to a quick 1.3% gain shortly after trading began,
only to give up nearly all of it before swinging a couple more times.
It's the latest bout of erratic trading for the market, which has been
largely churning in place for weeks. The S&P 500 is almost exactly where it was
on June 8. Often, it's swung sharply within a single day as hopes for a budding
economic recovery collide with continuing increases in coronavirus counts.
On Wednesday, as Wall Street was losing its stride, Florida announced
another daily death toll of more than 100 and Oklahoma's governor said he
tested positive for the coronavirus.
"People should be thinking about a balance of optimism and realism," said
Nela Richardson, investment strategist at Edward Jones.
She said there is a "long climb" to go for the economy's reopening and
pointed to other risks for the market, including U.S. tensions with China.
"We think it's going to be a pretty bumpy road ahead," she said.
Worries also remain high that the stock market has gone overboard in its
rally: It has taken less than four months for the S&P 500 to almost return to
its record after being down nearly 34%. But it could take years for the economy
and corporate profits to get back to where they were before the pandemic struck.
Markets nevertheless climbed Wednesday, bolstered by the optimism about a
possible vaccine and encouraging reports on the economy and corporate earnings.
The nation's industrial production improved more in June than economists
expected. So did manufacturing in New York state earlier this month.
Goldman Sachs rose 1.4% after it reported much stronger results for the
latest quarter than analysts expected. Financial stocks in general did well,
with those in the S&P 500 up 1.9%.
Other areas of the market where profits are closely tied to the strength of
the economy were also particularly strong. Industrial stocks rose 2.6% for the
biggest gain among the 11 sectors that make up the S&P 500, and energy
producers gained 2%.
Royal Caribbean Cruises surged 21.2% to lead a group of stocks that stand to
gain if shoppers and travelers get back to life as it was before the pandemic.
American Airlines rose 16.2%, Gap jumped 12.7% Live Nation Entertainment rose
11.7% and Hilton Worldwide added 10.1%.
The yield on the 10-year Treasury rose to 0.63% from 0.61% late Tuesday. It
tends to move with investors' expectations for the economy and inflation.
In Europe, Germany's DAX returned 1.8%, while the CAC 40 in Paris advanced
2%. Britains FTSE 100 picked up 1.8%.
In Asia, Tokyo's Nikkei 225 advanced 1.6% after the Bank of Japan kept its
ultra-easy monetary stance unchanged. It forecast that the economy would
improve later in the year, assuming there is no major "second wave" of
outbreaks of the new coronavirus.
South Korea's Kospi rose 0.8%, and Hong Kong's Hang Seng was nearly
Stocks in Shanghai slipped 1.6% after President Donald Trump signed a bill
and executive order that he says will hold China accountable for its oppressive
actions against the people of Hong Kong.
The legislation and order are part of an escalating diplomatic offensive
against China that is adding to chronic tensions over trade and other issues.
Benchmark U.S. crude oil rose 91 cents to settle at $41.20 per barrel. Brent
oil, the international standard, picked up 89 cents to settle at $43.79 per