By Caitlin Ostroff, Frances Yoon and Karen Langley
Stocks rose Wednesday as social unrest across the U.S. showed
signs of calming and investors bet economic activity will improve
with the ebbing of coronavirus infections and additional government
The S&P 500 advanced 1.4% as of the 4 p.m. close of trading
in New York. The Dow Jones Industrial Average added about 527
points, or 2.1%. The technology-heavy Nasdaq Composite gained 0.8%,
climbing to within 2% of February's all-time high.
"Investors are continuing to ignore the three P's -- pandemic,
protests and politics -- and are instead focused on what
increasingly is being interpreted as a quicker and better than
expected recovery in the economy and the idea that that may portend
a quicker recovery for earnings as well," said David Donabedian,
chief investment officer of CIBC Private Wealth Management.
Many cities in the eastern U.S. remained largely quiet
overnight, with the violent outbursts and skirmishes of recent days
abating, though protesters defied curfews in some areas. Markets
have continued to rally over the past week despite the social
unrest in the U.S. as investors bet that the protests sparked by
the killing of George Floyd wouldn't curtail business activity or
have a sustained impact on the economy.
Stimulus measures from governments and central banks in recent
weeks have also opened the floodgates on cheap money, which is
making its way into financial markets and boosting asset prices,
investors say. President Trump plans to meet with senior advisers
as soon as this week to discuss policy options for the next
coronavirus relief package as the administration prepares for
negotiations with Congress, according to a senior administration
Investors are looking ahead to the U.S. jobs report Friday for
insight into the state of the labor market. In a potential bright
sign Wednesday, the ADP National Employment Report showed nonfarm
private sector employment in the U.S. decreased by 2.76 million
jobs in May, a smaller loss than economists expected.
Sectors that have been battered this year led the S&P 500 on
Wednesday, with the energy, financial and industrial groups each
gaining more than 3%. Shares of small-cap companies also rallied,
as the Russell 2000 index climbed 2.7%.
"The fact that we're seeing broader participation right now is
indicative of increasing risk appetite among investors and more
confidence in the equity market rally," said Ed Campbell, portfolio
manager at QMA.
Among individual stocks, shares of Lyft climbed 11% after the
ride-hailing platform said demand had risen in recent weeks as
people began venturing out following Covid-19 lockdowns.
CrowdStrike Holdings shares rose 8.6% after the cybersecurity
company raised its financial projections for the year.
The gradual easing of lockdown measures around the world has
also failed to trigger a second wave of infections so far, fueling
optimism in markets, said Patrick Spencer, managing director of
U.S. investment firm Baird. Daily reported infections in the 10
most-affected countries have continued to decline, according to
data compiled by Johns Hopkins University.
"There's little evidence of a resurgence in the virus, and
that's really bolstered investor confidence," Mr. Spencer said. "If
basically the fundamentals aren't as bad as the market discounts,
then markets will always improve and the news is getting less
Progress toward a vaccine has also boosted sentiment. On
Tuesday, Anthony Fauci, a leading expert in the U.S. government's
response to the coronavirus pandemic, expressed cautious optimism
that several successful vaccine candidates would prove effective
"within a reasonable period of time" to fight coronavirus.
Overseas, the Stoxx Europe 600 gained 2.5%. South Korea's Kospi
Composite led gains in the Asia-Pacific region, adding 2.9% after
the government proposed an extra budget worth $28.9 billion, the
third this year, to ease the economic impact of the coronavirus
Global equity markets are being fueled by an improvement in
business sentiment, gradual reopenings, subsiding concerns about an
oversupply of oil, and additional stimulus measures, according to
Kerry Craig, global market strategist for J.P. Morgan Asset
Management. However, the abundance of risks calls for a cautious
approach to investing, he said.
"It's difficult to say what factors could impede the performance
in equities, but we have tensions rising between the U.S. and
China, a U.S. election coming up, and there is a politically
charged environment in the U.S. right now, so there are enough
risks out there," Mr. Craig said. "We'd rather be more balanced
right now than rotate into cheaper parts of the market."
The yield on the 10-year U.S. Treasury note rose to 0.766%, from
0.679% Tuesday. Yields rise as bond prices fall.
Write to Caitlin Ostroff at email@example.com, Frances
Yoon at firstname.lastname@example.org and Karen Langley at
(END) Dow Jones Newswires
June 03, 2020 16:18 ET (20:18 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.