U.S. stocks traded higher Tuesday afternoon and the S&P 500 was aiming to close above an important psychological level, following a long holiday weekend, as investors were emboldened by fresh coronavirus vaccine news and signs that global economies are crawling back from the pandemic shutdown.
How are benchmarks trading?
The Dow Jones Industrial Average DJIA, +2.07% climbed 563 points, or 2.3%, to 25,026, while the S&P 500 index SPX, +1.14% rose 40 points, or 1.4%, to 2,996, just a hair’s breadth from its 200-day moving average at 2,999.81, according to FactSet data. The 200-day moving average is viewed by market technicians as a dividing line between long-term bullish and bearish trends. Meanwhile, the Nasdaq Composite COMP, +0.14% gained 12 points, or 0.1%, to 9,336.
The Dow and S&P 500 index are trading at their highest levels since early March, with the S&P 500 on pace to close above its 200-day moving average for the first time since March 4, 2020.
What’s driving the market?
Investors were focusing on positive signs in the global economy, news of the gradual removal of economic restrictions related to COVID-19 and signs that Americans are beginning to feel safe enough to travel and congregate in larger groups.
“It’s all about optimism for the economy reopening,” said Megan Horneman, portfolio strategist at Verdence Capital Advisors. “That’s the big driver for the market today.”
See:Stock-market traders brace for ‘dogfight’ as S&P 500 tops 3,000 to trade above 200-day moving average
Travel-related stocks were surging in the U.S. and Europe on data showing an increase in U.S. air travel and after news that a German airline will resume flights in July as travel restrictions are lifted in Spain.
Data from booking platform OpenTable shows Americans were returning slowly to restaurants in some parts of the country, The Wall Street Journal reported, along with numbers showing freight trucking activity picking up in recent weeks. The New York Stock Exchange trading floor also partially reopened Tuesday, with Plexiglas barriers to keep traders apart and capacity limited to one quarter its pre-virus levels.
Apple Inc. AAPL, -0.67% said Tuesday that it would reopen dozens of U.S. stores as more regions begin to lift restrictions on business operations amid the COVID-19 outbreak.
Sahak Manuelian, managing director of equity trading at Wedbush Securities, also called the global monetary and fiscal stimulus aimed at blunting the economic carnage from the coronavirus “something we’ve never seen,” adding that the trillions “sloshing around today, just in the U.S.” has helped push equities higher. “The money has to find a home.”
Also viewed as a positive, late-stage biotech company Novavax Inc. NVAX, +4.99% said it started human trials of its vaccine candidate in Australia. The first phase of the placebo-controlled study will enroll 135 healthy adults and the preliminary round of data from that study is expected in July. Big drugmaker Merck & Co. MRK, +1.40% also said it would soon have two potential vaccines under its umbrella and an experimental drug against the coronavirus, joining rivals in the frantic search for medicines.
There are 10 vaccines in clinical evaluation and 114 in preclinical evaluation, according to a running tally by Fundstrat.
“There’s a hope trade,” said Manuelian of the sharp, global rally in equities. “It doesn’t seem that it’s going to be one company with a vaccine,” he told MarketWatch. “I think there is going to be plenty of opportunity for different companies to come out with their own formulations.”
However, amid the race for a medical breakthrough, the World Health Organization’s top health expert warned of a long battle to contain the pandemic. “We’re right in the middle of the first wave globally,” said WHO executive director Dr. Mike Ryan in an online briefing. “We’re still very much in a phase where the disease is actually on the way up,” Ryan said, pointing to South America, South Asia and other parts of the world.
Meanwhile U.S.-China relations remain tense. Hong Kong’s leader Carrie Lam on Tuesday brushed aside concerns about a Chinese power grab in the territory, after House national security adviser Robert O’Brien over the weekend threatened to sanction China if it carries through with plans for new national security laws in Hong Kong, where protests have reignited. Also Tuesday, the White House said that a move by China to tighten its grip on Hong Kong could threaten the city’s status as a financial hub. The tensions adds to Washington’s unhappiness over how China has handled the coronavirus outbreak. Also Sunday, China’s foreign minister Wang Yi cautioned against some political forces in the U.S. trying to push the two countries toward a “new Cold War.”
In U.S. economic data Monday, the Chicago Fed’s national activity index registered at a negative 16.74 in April, down from a revised negative 4.97 in March. The S&P CoreLogic Case-Shiller index showed home prices on a national level rose 4.4% annually in March, up from 4.2% in February.
The Conference Board’s consumer-confidence index rose in May to 86.6, just shy of the median forecast of 86.8, according to a MarketWatch poll of economists. New home sales rose in April, despite coronavirus-related shutdowns, to a seasonally-adjusted annual rate of 623,000 well above the expectations of 480,000.
Read:Housing-market ETFs jump on rosy home builder report
Which stocks are in focus?
- Sorrento Therapeutics Inc. SRNE, +3.84% Shares of rallied 3.4% Tuesday after Jason Kolbert at Dawson James Securities suggested the biopharmaceutical company was a good bet to successfully develop an “antibody cocktail” that could shield people from the COVID-19 virus.
- The U.S. Global ETF Jets JETS, +11.49%, which tracks the airline industry, was up 12.2%, led by International Consolidated Airlines IAG, -5.45%, Spirit Airlines SAVE, +20.40% and United Airlines Holdings Inc. UAL, +16.14%.
- Other airline and travel-related shares were rallying, including Carnival Corp. CCL, +12.55% and Norwegian Cruise Line Holdings Ltd. NCLH, +15.07% were up 12% and 14%, respectively, while American Airlines Group Inc. AAL, +14.63% Delta Air Lines Inc. DAL, +12.81% gained between 13% and 16%.
- Boeing Co. stock BA, +5.17% gained 5.5%.
- Netflix Inc. shares NFLX, -3.43% dropped 3.2% in afternoon trade, heading toward its longest losing streak since August 5, as competition from the launch of HBO Max and easing lockdown restrictions threaten to derail interest in the streaming video giant.
- AutoZone Inc. AZO, -0.22% Shares of were up 1.3% after the auto parts retailer reported fiscal third-quarter profit and sales that beat expectations
- Shares of Take-Two Interactive Software Inc. TTWO, -7.33% fell 6.2% even as BMO Capital Markets analyst Gerrick Johnson upgraded the stock to outperform from market perform.
- Hertz Global Holdings Inc. HT, +10.74% shares tumbled 76% Tuesday, after the car-rental company filed for bankruptcy late Friday.
How are other markets trading?
Crude-oil prices CLN20, +2.64% closed higher, with the price of a barrel of July West Texas Intermediate crude added $1.10, or 3.3%, to end at $34.35. In precious metals, gold GCN20, -1.68% for June delivery fell $29.90, or 1.7% to settle at $1,705.60 an ounce.
The U.S. dollar fell against a basket of its major rivals, with the ICE U.S. dollar index DXY, -0.85% trading down 1%.
Government bond yields were ticking higher, as the yield on the 10-year U.S. Treasury note TMUBMUSD10Y, 0.682% climbed about 2.4 basis points to 0.68%.
European stocks finished higher. The Stoxx Europe 600 SXXP, +1.08% advanced 1.1%, ending at 348.92, its highest closing level since March 6, while the FTSE 100 UKX, +1.24% gained 1.2%. Asian stocks closed higher overnight across the board, led by a 2.8% rally for the Nikkei 225 index NIK, +2.55%. Hong Kong’s Hang Seng Index HSI, +1.88% rose 2%, while the China CSI 300 added 0.9%.