Stocks rise for second day on oil rally, vaccine news
Stocks rallied for a second day on Tuesday as economies slowly emerged from pandemic isolation and the race accelerates toward a coronavirus vaccine.
The Dow Jones industrial average cooled in the last hour after being up more than 400 points during the day. The Dow finished at 23,883, a 133-point gain, or 0.6 percent. The broad Standard & Poor's 500 index advanced 0.9 percent to finish at 2,868, with health and technology the leading sectors.
The tech-heavy Nasdaq composite gained more than 1 percent, finishing at 8,809. The Nasdaq surged during midday trading and nearly broke the break-even mark for the year. The index is off 11 percent from its all-time high and down 1.1 percent on the year.
"People are continuing to feel we are on the other side of this mountain and that the worst may be behind us," said Ivan Feinseth of Tigress Financial Partners. "They think the coronavirus treatment remdezivir has promise and that work on a vaccine is advancing."
Oil prices posted a 20 percent gain Tuesday on increased gasoline consumption as Americans slowly resume driving. U.S. crude oil was trading at $25 per barrel, more than twice the $10 price it was selling for two weeks ago.
Oil supply has been out of whack most of the year, resulting in a supply glut that sent prices below the $50 price that most companies need to make a profit. The oversupply became a devastating glut with the coronavirus lockdown and the ensuing grounding of commercial air traffic and cutback in driving.
The glut reached a frenzy two weeks ago when holders of oil contract futures paid would-be buyers to take crude off their hands. There is so much oil now that tankers have become giant storage depots, roaming in oceans with no place to unload their supply.
Oil prices hit bottom a month ago and have doubled since last week.
U.S. domestic oil production is rapidly shutting down, which is expected to reduce output to 10 million barrels per day by next month. That is down from a record 13.1 million barrels the U.S. was producing just weeks ago. Shale oil drillers, many of which are burdened by heavy debt, are closing because they cannot make money at current oil prices.
"There is a sense in the market that the worst is behind us in terms of oil demand destruction," said John Kilduff of Again Capital. "We are going to have to see how successful the reopenings are. That will determine the oil price comeback. The Big Oil companies appear to be in the process of weathering the storm, especially with gasoline demand picking up."
Oil giant Chevron was one of the Dow's best performers on Tuesday, up 1.6 percent. Nike, UnitedHealth and Home Depot also had good days. Boeing was a big Dow drag at a loss of 4.6 percent.
Dow component Pfizer jumped 2.5 percent after the drugmaker announced that it had began testing multiple versions of an experimental coronavirus vaccine this week in the United States, a first step toward establishing the safety, dosage and most promising candidate to take into larger trials that will test effectiveness.
Global markets were mixed as public health orders overseas started to relax. The German DAX gained 1.8 percent and Britain's FTSE rose 1.7 percent. Hong Kong's HSI jumped 1.1 percent, but markets in Japan and India couldn't hold the trend. The Nikkei index fell 2.8 percent and the BSE Sensex dropped 0.8 percent.
