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U.S. stocks jumped and the S&P 500 breached 3,000 points on Tuesday as optimism about a potential coronavirus vaccine and a revival in business activity helped investors overlook simmering Sino-U.S. tensions.
The benchmark index traded above the key psychological level and also above its 200-day moving average, a closely watched long-term trend indicator, for the first time since March 5.
All 11 S&P sector indexes gained in early trading, with cyclical financials, industrials and energy stocks jumping more than 3%.
The S&P 500 has risen about 37% from its March lows on a raft of central bank and government stimulus, and is now just about 11% 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 United States.
“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.
In late morning trade, the Dow Jones Industrial Average was up 575.66 points, or 2.35%, at 25,040.82, the S&P 500 was up 54.53 points, or 1.85%, at 3,009.98, and the Nasdaq Composite was up 126.77 points, or 1.36%, at 9,451.36.
U.S. biotech group Novavax Inc jumped 17.3% as it joined the race to test coronavirus vaccine candidates on humans and enrolled its first participants.
Merck & Co Inc added 1.5% as it announced plans to develop two separate vaccines.
But with U.S. unemployment soaring beyond 14% and macroeconomic data pointing at a deep recession, analysts warned financial markets could be betting on too fast a recovery.
“Business cycles don’t simply end in two to three months – in a way that’s what some of these sectors are pricing. It’s going to be very slow,” said Patrick Fruzzetti, managing director and senior research analyst at the Rosenau Group.
Beaten down travel-related stocks soared, with S&P 1500 airlines index up 10.3% and cruise operators including Carnival Corp more than 12%.
Advancing issues outnumbered decliners more than 9-to-1 on the NYSE and 5-to-1 on the Nasdaq.
The S&P index recorded 13 new 52-week highs and no new low, while the Nasdaq recorded 83 new highs and four new lows.
Canada
The TSX, which rallied on Monday when U.S. markets were closed, was up 0.67% in in late morning trading, as the continued easing of coronavirus-driven lockdowns and strong gains on Wall Street helped restore investor confidence in equities.
The energy sector climbed 2.3% as crude prices gained on a perceived increase in demand.
The financials sector gained 2.1%. The industrials sector rose 0.7%.
The materials sector, which includes precious and base metals miners and fertilizer companies, lost 1.7%.
On the TSX, 178 issues were higher, while 49 issues declined for a 3.63-to-1 ratio favoring gainers, with 12.40 million shares traded.
The largest percentage gainers on the TSX were Chemtrade Logistics Income Fund, up 6.6%, and Enerplus Corp , which rose 4.8%.
Hexo Corp fell 6.4%, the most on the TSX, while the second-biggest decliner was Barrick Gold, down 3.9%.
The most heavily traded shares by volume were Hexo Corp , Green Organic Dutchman Holdings, and Coro Mining Corp.
The TSX posted four new 52-week highs and no new lows.
Across all Canadian issues there were 10 new 52-week highs and four new lows, with total volume of 24.08 million shares.
Also see: Market movers: Stocks seeing action on Tuesday – and why
Reuters
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