MAR Marriott International Inc

By Xie Yu, Avantika Chilkoti and Paul Vigna 

Global stocks rallied Monday as investors cheered early signs that lockdowns in the U.S. and Europe may be helping slow the coronavirus pandemic, even as Americans brace for a difficult week with infections likely to peak.

The Dow Jones Industrial Average rose 1,207 points, or 5.7%, to 22254, although the index is still down more than 20% this year.

The S&P 500 rose 5.7%, and the Nasdaq Composite gained 5.6%. The pan-continental Stoxx Europe 600 index gained 3.7%, while most major Asian equity markets closed higher.

All 11 sectors in the S&P 500 climbed, led by materials, up 7.6%. and utilities, up 7.2%. Some of the beaten-down retail and travel stocks were among the biggest gainers. Kohl's rose 21%, while Ulta Beauty gained 17% and Nordstrom climbed 18%. Meanwhile, Carnival added 22% and Marriott International increased 16%.

Crude futures, however, ticked down as major oil-producing nations prepare to meet Thursday to discuss how to address the global glut in supply.

"Everyone is just desperate for good pieces of news," said Peter Cecchini, chief market strategist at Cantor Fitzgerald. "It doesn't necessarily reflect anything fundamental. Nothing's changed."

Indeed, with volatility in the market as elevated as it has been lately, he said, Monday's moves are typical.

New York, which has been the hardest hit by the coronavirus in the U.S., on Sunday reported its first decline in deaths a day, though Gov. Andrew Cuomo cautioned that it was too early to understand the significance of that number. Health authorities have warned that new models show the number of cases is likely to reach a new high in coming days. At least one-quarter of the U.S. economy has gone idle as authorities curtailed travel and activity, an analysis conducted for The Wall Street Journal showed.

Strict containment measures also showed signs of helping slow the spread of the virus in parts of Europe, including Italy and Spain. Both countries are now recording fewer daily deaths than they have in over a week, and the pressure on hospitals in Italy is beginning to ease, officials said.

"A sense of eagerness to see a turn in the spread of the virus and economic growth is driving the market," said Govinda Finn, an economist at Aberdeen Standard Investments. However, "I wouldn't have massive confidence that we are there yet, so I think the rally probably won't last long," he cautioned.

The yield on 10-year Treasurys rose to 0.649%, up from 0.587% Friday, in another sign of investors' growing risk appetite. The market for U.S. government debt, normally the most liquid and actively traded bond market in the world, has calmed in recent weeks following a string of extraordinary measures by the Federal Reserve. Yields rise when bond prices drop.

West Texas Intermediate crude, the U.S. oil benchmark, fell 4.7% to $27.03 a barrel. An emergency summit to discuss global production cuts was pushed back from Monday to later in the week amid continued tensions between Saudi Arabia and Russia. Investors are growing increasingly concerned that a failure to cut output may result in the world running out of storage space for excess crude. Limiting production may also not be enough to offset the drop in demand.

"Even if they sort out something on the supply side, it probably won't be big enough to offset what's happening on the demand side," said Lyn Graham-Taylor, a strategist at Rabobank.

In Asia-Pacific markets, Australia's benchmark S&P/ASX 200 index closed up 4.3%. Japan's Nikkei 225 rose 4.2%. Markets in mainland China were closed for a holiday.

Some investors remain cautious about the prospects of a sustained market rally. Volatility remains high and cross-asset correlations -- the typical relationship between the price of different assets -- has broken down, suggesting the market is still under stress, according to Dwyfor Evans, head of macro-strategy for the Asia-Pacific region at State Street Global Markets in Hong Kong.

"We have good days and bad days. Sometimes they follow each other," Mr. Evans said.

Write to Xie Yu at Yu.Xie@wsj.com, Avantika Chilkoti at Avantika.Chilkoti@wsj.com and Paul Vigna at paul.vigna@wsj.com

(END) Dow Jones Newswires

April 06, 2020 13:18 ET (17:18 GMT)

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