S&P 500 Climbs, Extending August Rally
August 12 2020 - 12:19PM
Dow Jones News
By Anna Isaac and Ben Eisen
U.S. stocks rallied Wednesday, pushing the S&P 500 index to
the cusp of a record last reached before the pandemic shutdown took
effect.
The benchmark index rose 1.3% in midday trading, more than
erasing Tuesday's losses and putting it on track for its highest
close since mid-February.
The Dow Jones Industrial Average climbed about 1%, and the
technology-heavy Nasdaq Composite Index advanced 2%.
Stocks have risen all but one day in August, boosted by the
prospect of declining coronavirus cases at a time when the federal
government and central banks are still supporting the economy.
"There's optimism right now about an environment where the virus
situation gets better but we still have a ton of stimulus in the
system, " Ilya Feygin, a managing director at broker-dealer
WallachBeth Capital.
The steady rise also leaves the stock market susceptible to
reversal if cases begin to rise again or future stimulus efforts
disappoint, traders said.
Investors are keeping a close eye on lawmakers' negotiations
over a new coronavirus-relief package for American households and
businesses. Senate Majority Leader Mitch McConnell said talks were
"at a bit of a stalemate," dimming appetite for stocks and other
risky assets on Tuesday. Still, many investors remain optimistic
that a deal will be reached.
"Markets, particularly in the last day or so, seem to be pricing
in a stimulus even as lawmakers play down the odds," said Edward
Park, deputy chief investment officer at Brooks Macdonald, an
investment management firm.
Traders also said the market was supported Wednesday by
Democratic presidential candidate Joe Biden's announcement that
Kamala Harris would be his running mate. Wall Street veterans
widely consider Ms. Harris to be a more moderate choice than others
who were in contention for a spot on the ticket.
U.S. stock gains were led by the technology giants that had
dragged indexes lower on Tuesday. The sector jumped 2% in the
S&P 500, with Apple, Amazon.com, Facebook and Microsoft all up
more than 2%. Tesla shares rose nearly 9% after the electric-car
maker on Tuesday said it would enact a 5-for-1 stock split.
In bond markets, the yield on the benchmark 10-year Treasury
note gained for a fourth day, ticking up to 0.686%, from 0.657%
Tuesday. The yield on Tuesday had reached its highest level since
early July.
Fresh inflation data showed that U.S. consumer prices increased
by 0.6% in July, more than the average expectation of 0.3%,
according to FactSet.
Gold prices wavered Wednesday, after the commodity on Tuesday
fell by the most since March. Analysts said appetite for gold has
been eroded this week by the rise in U.S. government bond yields.
The precious metal -- usually viewed as a haven asset that
investors flock to when stocks are in tumult -- has climbed this
year even as equities advanced.
"There's been a breakdown in the relationship between equities
and gold, " said Geoff Yu, senior markets strategist at BNY Mellon.
"This happens if you believe there's going to be moderate
inflation, driven by an increase in productivity from
companies."
The U.S. crude oil benchmark rose 2.1% to $42.49.
Overseas, the pan-continental Stoxx Europe 600 rose about
1.2%.
In the U.K., fresh data showed that the country recorded a
steeper second-quarter contraction than any other rich nation,
signaling that it has suffered the worst economic hit from
coronavirus in Europe. The British economy shrank 20.4% in the
second quarter, the country's statistics agency said Wednesday. The
British pound slipped 0.1% against the dollar and fell 0.5% against
the euro.
In Asia, the Shanghai Composite Index fell 0.6% by the close of
trading, while Japan's Nikkei 225 rose 0.4%. Hong Kong's Hang Seng
Index rose 1.4%.
Write to Anna Isaac at anna.isaac@wsj.com and Ben Eisen at
ben.eisen@wsj.com
(END) Dow Jones Newswires
August 12, 2020 12:04 ET (16:04 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.