U.S. Stocks Climb, Following Surge in Chinese Markets
July 06 2020 - 4:48PM
Dow Jones News
By Anna Isaac and Akane Otani
U.S. stocks jumped Monday following the holiday weekend, lifted
by shares of everything from medical technology companies to
banks.
Global stocks have rallied to start the week, with China's
Shanghai Composite Index soaring 5.7% to its highest level since
early 2018. That was even as data continued to point to a rise in
coronavirus cases in the U.S., which some investors have worried
might force officials to further delay reopening plans across the
country.
At least part of stocks' recent gains appear to stem from bets
that the U.S. will be able to avoid having to reinstate widespread
restrictions on business.
"Very few people think that there will be as draconian lockdowns
again," said James Athey, a senior investment manager at Aberdeen
Standard Investments. Mr. Athey added that investors are also
keeping hopes pinned on news related to vaccine and treatment
developments.
The Dow Jones Industrial Average climbed 459.67 points, or 1.8%,
to 26287.03. The S&P 500 added 49.71 points, or 1.6%, to
3179.72 and the Nasdaq Composite advanced 226.02 points, or 2.2%,
to 10433.65.
Shares of Becton Dickinson rose $5.44, or 2.2%, to $250.47 after
the company said it was launching a rapid diagnostic test for the
new coronavirus.
Meanwhile, Uber Technologies added $1.84, or 6%, to $32.52 after
it said that it would buy Postmates for about $2.65 billion in an
all-stock transaction.
Bank shares also bounced higher, with Bank of America rising 37
cents, or 1.6%, to $23.66 and Goldman Sachs up $9.96, or 5%, to
$207.36. Many bank stocks are down substantially for the year, hurt
by prospects of a drop in lending and consumer activity due to the
pandemic.
Some analysts cautioned that the market's recent surge could run
out of momentum in the coming months, given the potential for
economic data to disappoint at a time when stocks look expensive
relative to expected earnings. Although reports have shown swaths
of the economy rebounding, many measures of consumer spending
remain far below prepandemic levels.
"Quite frankly, we're not that optimistic about markets for the
second half of the year," said John Vail, chief global strategist
at Nikko Asset Management, who added that the firm is expecting
middling returns for U.S. stocks for the year.
Elsewhere, the Stoxx Europe 600 rose 1.6% after data showed
German factory orders rebounded 10.4% in May after falling sharply
during the lockdown in April. The increase was driven by both
domestic and foreign orders, as economies around the world began to
reopen. Data also showed eurozone retail sales were stronger than
expected in May.
Signs that economic activity is rebounding from
coronavirus-related lockdowns have helped lift global markets,
analysts say.
"In recent weeks, the data has looked very positive from China.
Its economy is back in motion, and that should lift global equities
a bit," said Seema Shah, chief strategist at Principal Global
Investors.
China market analysts said it was hard to pinpoint a single
clear driver for Monday's surge, though some pointed to a
front-page editorial in state-owned China Securities Journal. It
said fostering a "healthy bull market" was important, given China's
increasingly complicated international relations, intense financial
and technological competition, and the challenge of controlling
internal financial risks.
Investors compared the leap in Chinese financial markets to a
wave of optimism that drove a historic bull run in 2014 and 2015
that eventually ended in a ruinous market crash.
"The article was a clear indication that China's government is
determined to support the rally in local stocks. They're capable of
doing that. They've proved that in the past by using state-owned
entities to purchase local stocks," said Piotr Matys, foreign
exchange strategist at Rabobank.
Xie Yu contributed to this article.
Write to Anna Isaac at anna.isaac@wsj.com and Akane Otani at
akane.otani@wsj.com
(END) Dow Jones Newswires
July 06, 2020 16:33 ET (20:33 GMT)
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