Stocks Rise on Hopes for New Coronavirus-Relief Package
By Caitlin Ostroff and Karen Langley
U.S. stocks rose Wednesday after White House negotiators said
they aim to reach a deal on a new coronavirus-relief package by the
end of the week.
The S&P 500 gained 0.7%, and the tech-heavy Nasdaq Composite
added 0.3%. The Dow Jones Industrial Average advanced 1.2%, or
about 330 points, boosted by a big gain in shares of Walt
Investors have been watching for signs that the government will
deploy more fiscal stimulus to help counter the economic damage
caused by the pandemic. Many economists expect last week's
expiration of $600 in enhanced weekly unemployment benefits to lead
to a sharp drop-off in household spending.
Negotiators from the White House said Tuesday that they aim to
reach agreement with Democrats on another aid package by week's
end. Both sides have said they made progress in talks to bridge
differences on unemployment payments and other proposals.
"You can't spend what you don't have," said Norm Conley, chief
executive and chief investment officer at JAG Capital Management.
"With as many people out of work as there are, that would have a
negative impact on consumer spending if this deal, or some sort of
deal, didn't materialize in the next week or two."
Economists have worried that a rise in U.S. coronavirus
infection rates last month could curtail economic recovery as some
regions moved to impose local restrictions to curb the number of
cases. Wednesday's ADP National Employment Report showed nonfarm
private-sector employment in the U.S. increased by 167,000 jobs in
July, smaller than the 1 million increase economists expected.
This week, new coronavirus cases have inched lower, lending to
optimism for faster economic recovery.
"What we have had so far is where economic activity and
infection rates have been decoupled," said Altaf Kassam, head of
investment strategy for State Street Global Advisors in Europe.
"Going forward, we are going to have them much more coupled
together. Economic activity and infection rates are going to be
much more closely linked."
Also on the radar for markets: Deteriorating relations between
Beijing and Washington, which are likely to weigh on investor
sentiment. The U.S. and China have agreed to high-level talks on
Aug. 15 to assess Beijing's compliance with the bilateral trade
agreement signed early this year, The Wall Street Journal reported
As earnings season continues, shares of Walt Disney rose 9.9%
after the media and entertainment company reported strong
subscriber growth for its streaming service. Shares of payments
company Square gained 12% after the company beat analysts'
expectations for earnings and revenue.
Gold gained 1.9% to $2,059.10 a troy ounce, extending a bull run
that has gained momentum during the coronavirus pandemic. This
year's sharp drop in yields on U.S. Treasurys to levels below the
expected pace of inflation is making gold, which doesn't generate
an income, more attractive as a store of value. The precious metal,
viewed as a haven asset, is also drawing investors concerned that
the economic fallout from the pandemic may lead to another rout in
"It reminds me of the price rally in 2011 when gold posted its
previous record," said Carsten Fritsch, an analyst at Commerzbank.
He said gold could climb higher given guidance from the Federal
Reserve that central bankers will keep interest rates low. "There's
no hint of higher interest rates in the near future, even if
there's an uptick in economic activity," he said.
Brent crude oil rose 3.3% to $45.89 a barrel, its highest since
Saudi Arabia and Russia started a price and production war in
March. Optimism among investors, falling U.S. inventories and a
weaker dollar have supported oil. The ICE U.S. Dollar Index, which
measures the greenback against a basket of currencies, fell
In bond markets, the yield on the 10-year Treasury ticked up to
0.548%, from 0.514% Tuesday, which was the second-lowest closing
level this year. Government bond yields, which move inversely to
price, have weakened in recent weeks following guidance from major
central banks that interest rates are likely to remain low for an
Write to Caitlin Ostroff at email@example.com and Karen
Langley at firstname.lastname@example.org
(END) Dow Jones Newswires
August 05, 2020 11:43 ET (15:43 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.