UPDATE: Dow closes up 500 points, tests 25,000 level, on recovery hopes and vaccine news
By Chris Matthews, MarketWatch , Joy Wiltermuth
Novavax says it has started human trials of its Covid-19 candidate
U.S. stocks finished higher Tuesday, but off key levels following a long holiday weekend, as investors were emboldened by fresh coronavirus vaccine news and signs that global economies are crawling back from the pandemic shutdown.
How did benchmarks perform?
The Dow Jones Industrial Average climbed 529.95 points, or 2.2%, to end at 24,995.11, after trading above 25,000 earlier in the session.
The S&P 500 index rose 36.32 points, or 1.2%, to close at 2,991.77, shy of its 200-day moving average of 2,999.81, according to FactSet data. The 200-day moving average is viewed by market technicians as a dividing line between long-term bullish and bearish trends. Meanwhile, the Nasdaq Composite gained 15.63 points, or 0.2%, finishing at 9,340.22.
The Dow finished the session 15.4% off its all-time closing high in February, the S&P 500 index off by 11.7% and the Nasdaq less than 5% from its record close.
What drove the market?
Investors were focusing on positive signs in the global economy, news of the gradual removal of economic restrictions related to COVID-19 and signs that Americans are beginning to feel safe enough to travel and congregate in larger groups.
"It's all about optimism for the economy reopening," said Megan Horneman, portfolio strategist at Verdence Capital Advisors. "That's the big driver for the market today."
See:Stock-market traders brace for 'dogfight' as S&P 500 tops 3,000 to trade above 200-day moving average (http://www.marketwatch.com/story/stock-market-traders-brace-for-dogfight-as-sp-500-lingers-below-its-200-day-moving-average-2020-05-22)
Travel-related stocks surged in the U.S (http://www.marketwatch.com/story/airline-stocks-soar-on-signs-of-travel-resumption-recovery-hopes-2020-05-26). and Europe on data showing (http://www.marketwatch.com/story/airport-travelers-jump-to-2-month-high-but-airline-stocks-fall-2020-05-22)an increase in U.S. air travel and after news that a German airline will resume flights in July as travel restrictions are lifted in Spain.
Data from booking platform OpenTable shows Americans were returning slowly to restaurants in some parts of the country, The Wall Street Journal reported (https://www.wsj.com/articles/for-economy-worst-of-coronavirus-shutdowns-may-be-over-11590408000?tesla=y&mod=article_inline&mod=article_inline), along with numbers showing freight trucking activity picking up in recent weeks. The New York Stock Exchange trading floor also partially reopened Tuesday, with Plexiglas barriers to keep traders apart and capacity limited to one quarter its pre-virus levels.
Apple Inc. (AAPL) said Tuesday that it would reopen dozens of U.S. stores (http://www.marketwatch.com/story/apple-to-reopen-dozens-of-us-stores-2020-05-26) as more regions begin to lift restrictions on business operations amid the COVID-19 outbreak.
Sahak Manuelian, managing director of equity trading at Wedbush Securities, called the global monetary and fiscal stimulus aimed at blunting the economic carnage from the coronavirus "something we've never seen," adding that the trillions "sloshing around today, just in the U.S." has helped push equities higher. "The money has to find a home."
Also viewed as a positive, late-stage biotech company Novavax Inc.(NVAX) said it started human trials of its vaccine candidate in Australia. The first phase (http://www.marketwatch.com/story/novavax-to-start-phase-1-trials-for-covid-19-vaccine-next-month-2020-04-08) of the placebo-controlled study will enroll 135 healthy adults and the preliminary round of data from that study is expected in July. Big drugmaker Merck & Co.(MRK) also said it would soon have two potential vaccines under its umbrella (http://www.marketwatch.com/story/merck-does-deals-to-develop-coronavirus-vaccines-drug-2020-05-26-71032439)and an experimental drug against the coronavirus, joining rivals in the frantic search for medicines.
There are 10 vaccines in clinical evaluation and 114 in preclinical evaluation, according to a running tally by Fundstrat.
"There's a hope trade," said Manuelian of the sharp, global rally in equities. "It doesn't seem that it's going to be one company with a vaccine," he told MarketWatch. "I think there is going to be plenty of opportunity for different companies to come out with their own formulations."
However, amid the race for a medical breakthrough, the World Health Organization's top health expert warned of a long battle to contain the pandemic. "We're right in the middle of the first wave globally," said WHO executive director Dr. Mike Ryan (http://www.marketwatch.com/story/coronavirus-update-global-case-tally-crosses-55-million-as-who-warns-of-risk-of-second-peak-in-current-infection-wave-2020-05-26) in an online briefing. "We're still very much in a phase where the disease is actually on the way up," Ryan said, pointing to South America, South Asia and other parts of the world.
Meanwhile U.S.-China relations remain tense. Hong Kong's leader Carrie Lam on Tuesday brushed aside concerns about a Chinese power grab (https://news.yahoo.com/hong-kong-leader-dismisses-concerns-124920956.html)in the territory, after ()House national security adviser Robert O'Brien over the weekend ()threatened to sanction (http://www.marketwatch.com/story/us-likely-to-sanction-china-if-hong-kong-law-is-passed-top-trump-aide-says-2020-05-24) China if it carries through with plans for new national security laws in Hong Kong, where protests have reignited. Also Tuesday, the White House said (http://www.marketwatch.com/story/trump-says-china-takeover-would-threaten-hong-kongs-financial-hub-status-white-house-2020-05-26) that a move by China to tighten its grip on Hong Kong could threaten the city's status as a financial hub. The tensions adds to Washington's unhappiness over how China has handled the coronavirus outbreak. Also Sunday, China's foreign minister Wang Yi cautioned against some political forces in the U.S. trying to push the two countries toward a "new Cold War."
(news/china/diplomacy/article/3085840/china-and-us-must-find-ways-get-along-and-avoid-new-cold-war?mod=article_inline)In U.S. economic data Monday, the Chicago Fed's national activity index registered at a negative 16.74 in April (http://www.marketwatch.com/story/chicago-fed-economic-index-falls-sharply-in-april-2020-05-26), down from a revised negative 4.97 in March. The S&P CoreLogic Case-Shiller index showed home prices on a national level rose (http://www.marketwatch.com/story/home-price-gains-continued-in-march-as-the-coronavirus-pandemic-swept-the-us-case-shiller-index-shows-2020-05-26) 4.4% annually in March, up from 4.2% in February.
The Conference Board's consumer-confidence index rose (http://www.marketwatch.com/story/consumer-confidence-stabilizes-in-may-after-sharp-plunge-in-prior-month-2020-05-26)in May to 86.6, just shy of the median forecast of 86.8, according to a MarketWatch poll of economists. New home sales rose in April (http://www.marketwatch.com/story/new-us-home-sales-rise-slightly-in-april-despite-coronavirus-related-shutdowns-2020-05-26), despite coronavirus-related shutdowns, to a seasonally-adjusted annual rate of 623,000 well above the expectations of 480,000.
Read:Housing-market ETFs jump on rosy home builder report (http://www.marketwatch.com/story/housing-market-etfs-jump-on-rosy-homebuilder-report-2020-05-26)
Which stocks were in focus?
How did other markets trade?
Crude-oil prices closed higher (http://www.marketwatch.com/story/oil-resumes-rise-lifted-by-supply-cuts-and-pickup-in-demand-2020-05-26), with the price of a barrel of July West Texas Intermediate crude adding $1.10, or 3.3%, to end at $34.35. In precious metals (http://www.marketwatch.com/story/gold-edges-lower-losing-shine-as-stocks-rally-on-easing-lockdowns-vaccine-hopes-2020-05-26), gold for June delivery fell $29.90, or 1.7% to settle at $1,705.60 an ounce.
The U.S. dollar fell against a basket of its major rivals, with the ICE U.S. dollar index trading down 0.9%.
Government bond yields were ticking higher (http://www.marketwatch.com/story/treasury-yields-rise-as-global-stock-markets-start-week-on-upbeat-tone-2020-05-26), as the yield on the 10-year U.S. Treasury note climbed about 3.8 basis points to 0.697%.
European stocks finished higher. The Stoxx Europe 600 advanced 1.1%, ending at 348.92, its highest closing level since March 6, while the FTSE 100 gained 1.2%. Asian stocks closed higher overnight (http://www.marketwatch.com/story/asian-shares-climb-as-investors-focus-on-global-recovery-hopes-2020-05-26) across the board, led by a 2.8% rally for the Nikkei 225 index . Hong Kong's Hang Seng Index rose 2%, while the China CSI 300 added 0.9%.
-Joy Wiltermuth; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
May 26, 2020 16:43 ET (20:43 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.