Late-session spurt lifts Dow above 25,000 for the first time since early March
Stocks rolled higher for the second day in a row as the economy continued its slow return to life amid hopes for more federal stimulus and scientific advances against the coronavirus.
The Dow Jones industrial average jumped 553 points, or 2.2%, in a late-session spurt to close above 25,000 for the first time since March 10. Financial stocks and beaten-up industrials helped power the blue chips - a comeback that signals confidence in the recovery -- to a close of 25,548.27. Goldman Sachs, JPMorgan Chase and American Express all had big days.
This comes on top of Tuesday's 530-point gain and leaves the Dow about 14% shy of the all-time high it set in February. It's now off 10% for the year.
"The stock market is like a party animal looking for a reason to celebrate," Kristina Hooper, chief global market strategist at Invesco, said in an email. "It has yet another reason to celebrate today, however tenuous, as it looks like the White House might be open to more fiscal stimulus. However, there are significant downside risks to this frothy stock market, particularly the possibility for a rise in US-China tensions."
The Standard & Poor's 500 advanced more than 1.5% to close above 3,000 points for the first time since March 5. At 3,036.13, the index is now 10% off its all-time high and down 6% for 2020. All 11 S&P sectors were positive, led by financials and industrials. The S&P technology sector was down most of the day but notched a slim gain at the close.
The Nasdaq came from beyond -- it was down more than 1% at one point -- to post a 0.8% advance and settle at 9,412.36. The Nasdaq is off 4% from its all-time high and is up 5% for 2020.
"People are rotating out of companies that were benefiting from the pandemic and lockdown and into companies that will benefit from the recovery," said Ivan Feinseth of Tigress Financial Partners.
Shares in hotels, cruise lines and airlines, which have been thrashed during the pandemic, posted healthy gains Wednesday as investors anticipate a revival in tourism and hospitality as states reopen continue to reopen their economies.
"This is all about the reopening and about growing hopes of a vaccine," said David Rosenberg of Rosenberg Research. "If you are bullish on that narrative, then you rotate to the sectors that have been the bottom feeders like banks, airlines, hotels."
The financial industry delivered more good news with a report Wednesday that mortgage applications for new homes rose 9%, according to the Mortgage Bankers Association.
European indexes were up more than 1% across the board, with Britain's bank stocks pushing nearly forward 4% on the day.
Oil prices cooled, with major benchmarks dropping around 4% Wednesday, snapping a steady rise during May.
The race to develop a covid-19 vaccine and other treatments has buoyed investors in recent weeks. Merck announced Tuesday that it was teaming up with another company to develop a coronavirus vaccine, as well as new treatments. Last week, Maryland-based Novavax reported that it entered human study for a coronavirus vaccine while Massachusetts-based Moderna announced that a small, early trial for its own candidate yielded positive results. Pfizer, Johnson & Johnson and others also are trying to develop a vaccine for use as early as this year.
The pandemic has hobbled the U.S. economy as business and social activity came to a hard stop. Jobless claims surged toward 40 million last week. The unemployment rate spiked to 14.7% in April and is projected to go even higher May.
