By Joe Wallace and Paul Vigna
U.S. stocks rose Tuesday even as investors weighed the prospects
of a protracted economic recovery following the coronavirus
lockdowns, outbreaks of violence across American cities and
tensions with China.
The Dow Jones Industrial Average climbed 267.63 points, or 1.1%,
to 25742.65, led by Home Depot, American Express and Goldman Sachs.
The S&P 500 rose 25.09 points, or 0.8%, to 3080.82, and the
Nasdaq Composite added 56.33 points, or 0.6%, to 9608.37. The
technology-heavy gauge is only 2.1% below its February high.
The benchmark S&P 500 has risen for six of the past seven
sessions -- and is up 38% from its March low -- boosted by data
suggesting the downturn in the U.S. economy has bottomed and hopes
that the coronavirus will be brought under control. Many analysts
attribute the recent rebound to an unprecedented level of stimulus
offered by the Federal Reserve and Congress.
"There's just so much stimulus, it's propping up the market,"
said Oanda analyst Edward Moya. "The stock market is now no longer
a true reflection of the economy, and you're going to see that
remain the case for several years."
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 up. Investors have largely shrugged off
the impact of the protests on earnings and the economy.
The U.S. will be dealing with the effects of the pandemic,
economic recession, riots and even excessive government spending
for years, while the market is betting it is all just a short-term
blip, said Lindsey Piegza, chief economist at Stifel Financial.
"That's a really bold assumption by investors," she said.
Investors also continued to monitor tensions between the U.S.
and China, which have feuded in recent weeks over Beijing's
handling of the coronavirus and its crackdown on Hong Kong.
Among individual stocks, Western Union rose 11% and was the top
performer in the S&P 500 after Bloomberg News reported that the
money-transfer provider was seeking to buy MoneyGram
International.
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 0.679% from 0.669% Monday.
U.S. crude futures rose 3.9% to $36.81. 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 1.6%, led by shares of 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 new 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%.
Xie Yu contributed to this article.
Write to Joe Wallace at Joe.Wallace@wsj.com and Paul Vigna at
paul.vigna@wsj.com
(END) Dow Jones Newswires
June 02, 2020 17:03 ET (21:03 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.