The gains in US market came as former Vice President Joe Biden emerging as the frontrunner of the Democratic Party's presidential race, winning at least nine and possibly 10 of the nomination contests held across 14 states, providing relief to market participants who are wary of the more progressive policy positions of rival Bernie Sanders, a self-described democratic socialist. Sanders favors hefty taxes on wealth and a radical remake of the US healthcare system.
Meanwhile, the Federal Reserve's surprise interest rate cut and upbeat economic data soothed worries about the impact of the spreading coronavirus outbreak. The Fed jolted markets with a half-a-percentage-point rate cut on Tuesday, saying that while the economy's fundamentals remain strong, the coronavirus poses evolving risks to economic activity. Investors are now encouraged by other global central banks following suit, with the Bank of Canada also lowering rates by half a%age point to 1.25%
Shares were also bolstered by the news that U.S. lawmakers reached a deal on Wednesday for an $8.3 billion emergency aid package to combat the spread of coronavirus. It includes nearly $7.8 billion for agencies dealing with the virus and about $500 million for telehealth services. Also on Wednesday, the International Monetary Fund said it would provide $50 billion in emergency funding, including no interest loans, to help poorer countries respond to the epidemic.
Financial markets have been on a roller coaster as investors grapple with the potential economic damage caused by fractured supply chains, travel bans and the disruption of daily life. As the new coronavirus continued to spread, Italy on Wednesday announced it was closing all schools and Israel moved to tighten travel restrictions on five more European nations. The death-toll currently stands at more than 3,200 and a growing list of trade shows and public events have been postponed or canceled as economists slash their outlook for 2020. There is little clarity about how long it will take governments and health officials to contain the virus, leading to a gloomy prognosis for global economic growth.
Shares in health insurers were up on expectations that Biden would seek more modest changes to the health care market in comparison with Sanders, who has sharply criticized insurers. UnitedHealth Group surged 10.7%, Anthem won 15.6% and Humana jumped 14.4%.
Campbell Soup soared 10.1% after lifting its 2020 profit forecast, due in part to lower interest payments following moves to cut debt.
ECONOMIC NEWS: US ADP Private Sector Employment Increases In February- US private sector employment increased in the month of February, according to a report released by payroll processor ADP on Wednesday, although the report also showed a notable downward revision to the substantial job growth in the previous month. ADP said private sector employment climbed by 183,000 jobs in February. However, the report also showed the spike in jobs in January was downwardly revised to 209,000 from the previously reported 291,000. The stronger than expected job growth in February reflected a significant increase in employment in the service-providing sector, which jumped by 172,000 jobs.
Meanwhile, the Institute for Supply Management reported its nonmanufacturing gauge in February rose to 57.3% from 55.5% in the previous month, suggesting that the services sector had yet to feel the blow from the coronavirus.
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