U.S. Stocks Climb Amid Swirling Issues
June 02 2020 - 12:52PM
Dow Jones News
By Joe Wallace, Paul Vigna and Xie Yu
U.S. stocks wavered Tuesday as investors faced a protracted
economic recovery following the coronavirus lockdowns, outbreaks of
violence across American cities and tensions with China.
The Dow Jones Industrial Average rose 144 points, or 0.6%, led
by financial stocks including American Express and Goldman Sachs.
The S&P 500 rose 0.2%, and the Nasdaq Composite fell 0.3%.
The S&P 500 has risen for five out of the past six sessions,
boosted by data suggesting the downturn in the U.S. economy has
bottomed and hopes that the coronavirus will be brought under
control.
The index is up more than 35% from its March low, a rebound many
analysts attribute to an unprecedented level of stimulus offered by
the Federal Reserve and Congress.
Still, the U.S. economy could take the better part of a decade
to fully recover from the pandemic and related shutdowns, a U.S.
budget agency said Monday. Output isn't expected to catch up to a
previously forecast level until the fourth quarter of 2029, the
nonpartisan Congressional Budget Office said.
"It's clear that we're not going to go back to the levels [of
economic activity] we saw pre-Covid-19," said Sophie Huynh, a
strategist at Société Générale. "It's impossible: we're living in a
self-inflicted recession. We're going to start the post-Covid 19
world at the start of a new economic cycle."
Cities across the U.S. faced another night of protests sparked
by the death of George Floyd in Minneapolis last week. Some major
metropolitan areas, including New York and Los Angeles, either
issued or extended nighttime curfews. President Trump called for a
tougher government response to the violent unrest and said he is
ordering thousands of armed soldiers and law enforcement officers
to the nation's capital.
The unrest has added to challenges faced by businesses seeking
to get back up and running following lockdowns designed to stem the
coronavirus pandemic. Macy's delayed the reopening of some stores
shut during the pandemic. Apple stores that had recently unlocked
their doors were boarded back up. Investors have largely shrugged
off the impact of the protests on earnings and the U.S.
economy.
"If it looks like Wall Street is flourishing while Main Street
flounders, there's another back-door bailout but not a real
recovery, there's going to be calls on the legitimacy of these
markets," said Joseph Brusuelas, chief economist at RSM US.
Among individual stocks, Western Union rose 11% after Bloomberg
News reported that the money-transfer provider was seeking to buy
MoneyGram International. Shares of Host Hotels & Resorts, which
said it expects to reopen 11 more hotels this month, rose 0.9%.
There were also signs of life in the IPO market. Warner Music
Group and ZoomInfo Technologies plan to list their shares Wednesday
and Thursday in what would be the biggest overall IPO and the top
new technology issue of the year, respectively.
In bond markets, the yield on the 10-year U.S. Treasury note
rose to 0.675%, from 0.669% on Monday.
U.S. crude futures rose 1.4% to $35.94. An alliance of
oil-producing nations, led by Saudi Arabia and Russia, is close to
a deal that would extend output cuts through Sept. 1, according to
delegates. The Organization of the Petroleum Exporting Countries
has agreed to move a planned conference call to discuss future
output curbs to Thursday, they said.
International stocks gained ground, extending a recent rally
fueled by hopes of a rebound in the global economy. The Stoxx
Europe 600 advanced 1.5%, led by shares in auto and auto-parts
makers.
Germany's DAX index surged 3.7%, following a public holiday
Monday, on reports that Chancellor Angela Merkel's ruling coalition
is holding talks about delivering a second spending package to
boost the country's economy.
"There's a lot of positivity starting to build up around
Europe," said James McCormick, head of desk strategy at NatWest
Markets, pointing to a decline in coronavirus cases and relaxation
of lockdown measures on the continent.
Japan's Nikkei 225 closed 1.2% higher, while Hong Kong's Hang
Seng Index rose 1.1%.
"The equity market has been pricing in a smooth recovery of the
economy, although it might be too optimistic while overlooking some
potential risks," said Anthony Chan, chief Asia investment
strategist at Union Bancaire Privée.
Write to Joe Wallace at Joe.Wallace@wsj.com, Paul Vigna at
paul.vigna@wsj.com and Xie Yu at Yu.Xie@wsj.com
(END) Dow Jones Newswires
June 02, 2020 12:37 ET (16:37 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.