US Stock Rally Rolls On 06/03 15:31
Stocks bubbled even higher on Wednesday, vaulting Wall Street back to where
it was just one week after it set its all-time high earlier this year, as
optimism builds that the economy can climb out of its current hole relatively
(AP) -- Stocks bubbled even higher on Wednesday, vaulting Wall Street back
to where it was just one week after it set its all-time high earlier this year,
as optimism builds that the economy can climb out of its current hole
The S&P 500 rose 1.4% for its fourth straight gain as lockdowns loosen
around the world and raise hopes for a coming economic recovery. Treasury
yields also strengthened in a sign of improved confidence after reports
suggested that while the U.S. economy is still getting pummeled, it may not be
as bad as economists had feared.
"It's fairly clear to us that the economy clearly bottomed in late April and
early May," said James Ragan, director of wealth management research at D.A.
Davidson. "At some point the concern will be on the pace of the recovery and
not just the recovery itself."
The S&P 500 rose 42.05 points to 3,122.87, the latest upward move in its
nearly 40% surge since late March. The index is back above where it was on Feb.
26, one week after setting its record.
The Dow Jones Industrial Average gained 527.24 points, or 2%, to 26,269.89,
and the Nasdaq composite rose 74.54, or 0.8%, to 9.682.91.
A survey from payroll processor ADP said that private employers cut nearly
2.8 million jobs last month, but that was much milder than the 9.3 million that
economists told investors to expect. That raises optimism that Friday's more
comprehensive jobs report from the U.S. government may also not be as bad as
feared. Economists say it may show a loss of 8 million jobs, which would be a
deceleration from April's loss of 20.5 million jobs.
Other reports showed an economy that remains in bad shape, but not quite as
terrible as economists had forecast. One report said the nation's services
industries contracted by less than economists expected, and at a more modest
rate than in April. Another report said factory orders dropped 13% in April,
but not by as much as the 14.8% that economists had forecast.
Companies that would most benefit from a growing economy led the market
Wednesday, continuing a recent trend as hopes rise that the economy and life in
general can return closer to normal as business-shutdown orders lift.
Financial stocks in the S&P 500 jumped 3.8% for one the largest gains among
the 11 sectors that make up the index. JPMorgan Chase rose 5.4%, and Wells
Fargo added 5.2%. They recovered more of the losses sustained earlier this year
on worries that the recession would mean waves of loan defaults for them.
Smaller stocks were also among the market's biggest winners, as they often
are when expectations are rising for the economy's strength. The Russell 2000
index of small-cap stocks rose 2.4%.
Stocks that had been stalwarts earlier when investors were building
portfolios that could win in a stay-at-home economy, meanwhile, were lagging.
Netflix fell 1.2%.
In other trading, chicken company Pilgrim's Pride lost 12.4% after its CEO
was among several industry executives charged with price fixing by a federal
grand jury, and movie theater operator AMC Entertainment fell 2.5% after saying
it may not survive the coronavirus pandemic, which has shuttered its theaters.
The four straight gains for the overall S&P 500 mark its longest winning
streak since early February, before the market sold off by nearly 34% on
worries that the coronavirus outbreak will send the economy into its sharpest
recession in decades.
Stocks have been climbing since late March, at first on relief after the
Federal Reserve and Congress promised massive amounts of aid for the economy.
More recently, the driving force has been optimism that growth can resume as
states across the country and nations around the world lift restrictions on
businesses intended to slow the spread of the outbreak.
The S&P 500 has climbed back within 7.8% of its record.
Widespread protests around the country following the killing of George Floyd
haven't dented the rally, at least so far. One worry is that by bringing so
many people together, the protests could also lead to more infections of the
Many professional investors have been warning that the stock market's rally
may have been too much, too soon. The recovery for the economy is likely to be
much slower than the sharp rebound the stock market has just undertaken, which
could be setting investors up for disappointment.
Concern is particularly high that stock prices have climbed much faster than
expectations for coming corporate profits and other measures of financial
health, which is pushing up what Wall Street calls "valuations" for stocks.
Even though early data suggests people want to get back to restaurants and
shops, the recovery may be slower than expected, said Megan Horneman, director
of portfolio strategy at Verdence Capitol Advisors.
"This is a combination of some better economic indicators with the amount of
money that the Fed has pumped into the economy," she said of the market's
rally. "However, when you're dealing with heightened valuations, it is
dangerous to chase some of that momentum."
The yield on the 10-year Treasury rose to 0.75% from 0.68% late Tuesday.
European and Asian stock markets also rose.