S&P 500 clears 3,000 barrier on hopes of recovery, vaccine

S&P 500 clears 3,000 barrier on hopes of recovery, vaccine

(Reuters) – ṄU.S. stocks jumped and the S&P 500 crossed 3,000 points on Tuesday as optimism about a potential coronavirus vaccine and a revival in business activity helped investors overlook simmering Sino-U.S. tensions.

The benchmark index traded above the key psychological level for the first time since March 5, but came off session highs as White House adviser Larry 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”.

Still, all 11 S&P sector indexes were trading higher, with cyclical financials .SPSY and industrials .SPLRCI rising more than 4%.

The S&P 500 index .SPX has risen about 37% from its March lows on central bank and government stimulus at a time when the U.S. economy is seeing its biggest job loss since the Great Depression. It is now about 11% below its February record high.

On Monday, California decided to reopen in-store retail businesses and places of worship from one of the most restrictive shutdowns in the United States.

“People have been locked up and when they see sparkles of hope like vaccines, that drives optimism probably ahead of where it should be and clearly ahead of the economy,” said Richard Steinberg, chief market strategist at Colony Group in Florida.

Data showed U.S. consumer confidence nudged up in May, adding to hopes the worst of the impact of the shutdown in economic activity was probably in the past.

At 12:31 p.m. ET, the Dow Jones Industrial Average .DJI was up 593.68 points, or 2.43%, at 25,058.84, the S&P 500 .SPX was up 50.88 points, or 1.72%, at 3,006.33. The Nasdaq Composite .IXIC was up 81.78 points, or 0.88%, at 9,406.37.

U.S. biotech group Novavax Inc (NVAX.O) jumped 13.3% as it joined the race to test coronavirus vaccine candidates on humans and enrolled its first participants. Merck & Co Inc (MRK.N) added 1.9% as it announced plans to develop two separate vaccines.

With macroeconomic data pointing at a deep recession, analysts warned the financial markets could be betting on too fast a recovery.

“The impact on the economy and corporate earnings will be seen for several quarters (and) I’m not sure if it has been completely baked into the equity prices,” Robert Wyrick, chief investment officer at Post Oak Private Wealth Advisors in Houston, Texas told the Reuters Global Markets Forum.

Beaten down travel-related stocks soared, with S&P 1500 airlines index .SPCOMAIR up about 11% and cruise operators including Carnival Corp (CCL.N) more than 12.6%.

Meanwhile, 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 decliners by a 6.47-to-1 ratio on the NYSE and by a 3.27-to-1 ratio on the Nasdaq.

The S&P index recorded 13 new 52-week highs and no new lows, while the Nasdaq recorded 97 new highs and eight new lows.

Reporting by Medha Singh and Uday Sampath, additional reporting by Lisa Pauline Mattackal in Bengaluru; Editing by Arun Koyyur

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