S&P 500 on Track for New High
By Anna Isaac and Ben Eisen
U.S. stocks rallied Wednesday, putting the S&P 500 index on
track for its first closing record since before the pandemic
shutdown took effect.
The benchmark index rose 1.6% to 3387.62 in afternoon trading,
putting it on course for its first new high since Feb. 19. The
index would need to close above 3386.15 to eclipse the previous
The Dow Jones Industrial Average climbed about 1.2%, and the
technology-heavy Nasdaq Composite Index advanced 2.3%.
Stocks have risen in 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
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.
The steady rise leaves the stock market susceptible to reversal
if cases begin to rise again or future stimulus efforts disappoint,
traders said. Some have pointed to trading behavior where stocks
continually rise with few fundamental drivers, much like during the
dot com boom.
"You have a lot of things that are very reminiscent of a
late-90s melt-up," said Chris Harvey, head of equity strategy at
Wells Fargo & Co. He said he doesn't expect the market to crash
but believes stock gains are likely to be muted in the next few
Wednesday's gains were led by the technology giants that had
dragged indexes lower a day earlier. The sector jumped 2.4% in the
S&P 500, with Apple, Amazon.com, Facebook and Microsoft all up
more than 2%. Tesla shares rose 13% 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 0.669%, from 0.657%
Tuesday. The yield on reached its highest level since July 6.
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 edged 0.1% higher, 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
The U.S. crude oil benchmark rose 2.5% to $42.67 a barrel.
Overseas, the pan-continental Stoxx Europe 600 closed 1.1%
higher, its fourth straight day of gains.
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
In Asia, the Shanghai Composite Index fell 0.6%, while Japan's
Nikkei 225 rose 0.4%. Hong Kong's Hang Seng Index rose 1.4%.
Write to Anna Isaac at firstname.lastname@example.org and Ben Eisen at
(END) Dow Jones Newswires
August 12, 2020 16:01 ET (20:01 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.