By Caitlin McCabe, Anna Isaac and Frances Yoon 

U.S. stocks surged Wednesday, climbing to levels not seen since early March, on optimism that economic activity is gathering steam and authorities may offer more stimulus to bolster the recovery.

The Dow Jones Industrial Average rose 553.16 points, or 2.2%, to 25548.27 -- marking the first time since early March that the blue-chip index has closed above the 25000 mark. The index was powered by gains in American Express, Goldman Sachs and JPMorgan Chase, all of which climbed more than 5%.

The S&P 500, meanwhile, surpassed 3000 for the first time in nearly three months. The benchmark index rose 44.36 points, or 1.5%, to 3036.13.

Economically sensitive cyclical stocks, including those in the financials and industrials sectors, have been staging a comeback over the past week, erasing some of the punishing losses they suffered during the coronavirus pandemic.

Shares of retailers, which similarly were battered by widespread stay-at-home orders, also lifted indexes. Nordstrom gained 17% and Gap jumped 19%, ranking among the biggest gainers in the S&P 500.

Stocks have been buoyed in recent days by signs that the White House and Congress are considering more measures to blunt the impact of historic levels of unemployment on the economy. The Trump administration is examining proposals to provide cash incentives to encourage unemployed Americans to return to work, a top economic adviser said in an interview on Fox News.

Traders have also been optimistic that early signs of consumer spending could become more permanent. Restaurant bookings and spending on hotels and airlines appear to be picking up, helping to further lift share prices in those industries.

"It's a dash for trash," said Ryan Detrick, senior market strategist at LPL Financial. "[Investors are] selling the winners and moving into those laggards. They're moving money around but not blindly exiting...that's a healthy development."

The long-running rally in technology stocks has paused in recent days, a sign that investors are now bargain hunting for less expensive shares. New tensions between President Trump and Twitter this week also contributed to the downbeat sentiment.

Twitter tumbled 2.8% after President Trump responded to the social media company's decision Tuesday to apply a fact-checking notice to one of his tweets. Mr. Trump tweeted Wednesday morning that there will be "Big action to follow."

Meanwhile, Facebook fell 1.3% and Amazon tumbled 0.5%, extending its losses for a fourth day -- the company's longest losing streak since late February.

A late-session rally in stocks including Apple and Netflix proved potent enough to power a gain for the Nasdaq Composite, which traded lower for most of the session. The tech-heavy index rose 72.14 points, or 0.8%, to finish at 9412.36. Wednesday marked the sixth time since 2010 that the index was down more than 2% only to finish higher.

Biotechnology companies were among the weaker performers, despite promising signs for a coronavirus vaccine. Moderna, which reported encouraging early results from its vaccine candidate last week, lost 9.6%. Inovio Pharmaceuticals fell 8.8%.

Some traders have warned that the stock market remains fragile. Though the S&P 500 is now only off 6% for the year, the economy still remains dogged by steep unemployment and reduced consumer spending.

The Federal Reserve said Wednesday in its "beige book," its periodic and anecdotal report on economic conditions, that U.S. businesses saw limited evidence of a recovery in recent weeks. The report, which contains information through May 18, showed drops in auto sales, home sales, manufacturing activity, among other indicators. Travel-industry contacts in multiple areas reported steep declines in hotel occupancy, in part, because of a plunge in tourism and convention cancellations.

As a result, some traders and analysts remain unsure of how quickly the economy can rebound, even when stay-at-home orders are lifted.

"Just because we're allowed to re-open and allowed to go to restaurants again and the bans are lifted, it doesn't necessarily mean that we'll have an uptick in consumer spending and consumption," said Nancy Davis, chief investment officer of Quadratic Capital Management and portfolio manager of the IVOL exchange-traded fund. "It's like an engine -- the car has completely stalled and we don't know if we're going to be able to go a block or a mile."

The yield on the benchmark 10-year U.S. Treasury ticked lower Wednesday to 0.677%, from 0.697% the day before, signaling some demand for safe assets. Yields fall when bond prices rise.

Meanwhile, July futures for West Texas Intermediate, the main U.S. oil price, fell 4.5% to settle at $32.81 after the U.S. Energy Information Administration reported an 8% week-over-week decline in gasoline consumption and a 4% reduction for diesel during the week that ended May 15.

Outside the U.S., the pan-continental Stoxx Europe 600 edged up 0.2% after the European Union set out a $2 trillion coronavirus response plan. The proposal includes a EUR750 billion ($824 billion) recovery plan and EUR1.1 trillion budget over the next seven years.

And in Asia, stocks were largely mixed. Japan's Nikkei 225 gained 0.7%. China's Shanghai Composite drifted 0.3% lower. And the Hang Seng slipped 0.4% as the prospect of renewed unrest in Hong Kong added to growth concerns.

Write to Caitlin McCabe at, Anna Isaac at and Frances Yoon at


(END) Dow Jones Newswires

May 27, 2020 17:03 ET (21:03 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.