S&P 500 clears 3,000 barrier on hopes of recovery, Covid-19 vaccine

US stocks jumped and the S&P 500 crossed 3,000 points on Tuesday as optimism about a potential coronavirus vaccine and a revival in business activity helped investors overlook simmering Sino-US tensions.

The benchmark index traded above the key psychological level for the first time since March 5, but came off session highs as White House advisor Larry Kudlow said President Donald Trump was “so miffed with China on virus and other matters that the trade deal is not as important to him as it once was.”
 

Still, all 11 S&P sector indexes were trading higher, with cyclical financials and industrials rising more than 4%.

The S&P 500 index has risen about 37 per cent from its March lows on central bank and government stimulus at a time when the US economy is seeing its biggest job loss since the Great Depression. It is now about 11 per cent below its February record high.

On Monday, California decided to reopen in-store retail businesses and places of worship from one of the most restrictive shutdowns in the US. “People have been locked up and when they see sparkles of hope like vaccines, that drives optimism probably ahead of where it should be and clearly ahead of the economy,” said Richard Steinberg, chief market strategist at Colony Group in Florida.

Data showed US consumer confidence nudged up in May, adding to hopes the worst of the impact of the shutdown in economic activity was probably in the past.

At 11:16 pm, the Dow Jones Industrial Average was up 671.34 points, or 2.74 per cent, at 25,136.50, the S&P 500 was up 57.58 points, or 1.94 per cent, at 3,012.54. The Nasdaq Composite was up 98.20 points, or 1.05 per cent, at 9,406.37.

US biotech group Novavax jumped 13.3 per cent as it joined the race to test coronavirus vaccine candidates on humans and enrolled its first participants. Merck & Co added 1.9 per cent as it announced plans to develop two separate vaccines.

With macroeconomic data pointing at a deep recession, analysts warned the financial markets could be betting on too fast a recovery.

“The impact on the economy and corporate earnings will be seen for several quarters (and) I’m not sure if it has been completely baked into the equity prices,” Robert Wyrick, chief investment officer at Post Oak Private Wealth Advisors in Houston, Texas told the Reuters Global Markets Forum.

Beaten down travel-related stocks soared, with S&P 1500 airlines index up about 11 per cent and cruise operators including Carnival Corp more than 12.6 per cent.

Meanwhile, the NYSE on Tuesday partially reopened its trading floors at the iconic 11 Wall Street building, which had been closed since March 23.