Wall Street gains as investors pin hope on stimulus-powered rebound
(Reuters) – Wall Street’s main indexes inched up on Monday following a sharp selloff last week, as investors clung to hopes of a stimulus-backed economic rebound even as coronavirus cases surged, while a jump in Boeing shares boosted the blue-chip Dow.
The planemaker (BA.N) rose 7.3% after the Federal Aviation Administration confirmed on Sunday it had approved key certification test flights for the grounded 737 MAX that could begin as soon as Monday.
Of the 11 major S&P 500 sub-indexes, only information technology .SPLRCT was in the red. The industrial .SPLRCI and materials .SPLRCM sectors led gains with a jump of more than 1.5% each.
“The market is taking a tremendous amount of comfort in the fact that as long as we contain the virus, the economy is going to recover very fast and you’re going to see cyclical stocks start to rally again,” said Thomas Hayes, managing member at Great Hill Capital LLC in New York.
The benchmark S&P 500 .SPX has rebounded since a coronavirus-driven crash in March, up about 16% since April and set for its best quarter since 1998, on a raft of U.S. fiscal and monetary stimulus as well as improving economic data.
Data on Monday showed contracts to buy previously owned homes rebounded by the most on record in May, suggesting the housing market was starting to turn around. Later this week, investors will focus on employment, consumer confidence and manufacturing data for June.
Still, volatility has edged up since late last week as the number of COVID-19 cases spiked, with Wall Street’s fear gauge now hovering near two-week highs.
A Reuters tally showed the death toll from the respiratory illness topped half a million on Sunday.
The BlackRock Investment Institute downgraded U.S. equities to “neutral”, citing risks of fading fiscal stimulus, an extended epidemic as well as renewed China-U.S. tensions.
At 10:37 a.m. ET, the Dow Jones Industrial Average .DJI was up 344.20 points, or 1.38%, at 25,359.75, the S&P 500 .SPX was up 22.65 points, or 0.75%, at 3,031.70, and the Nasdaq Composite .IXIC was up 34.29 points, or 0.35%, at 9,791.51.
Gilead Sciences Inc (GILD.O) rose 1.8% as it priced its COVID-19 drug candidate remdesivir at $2,340 for a five-day treatment in the United States and some other developed countries.
Coty Inc (COTY.N) jumped 10.8% after a report said it agreed to buy a 20% stake in reality TV star Kim Kardashian West’s makeup brand KKW for $200 million.
Facebook Inc (FB.O) extended declines from Friday as a report said PepsiCo Inc (PEP.O) was set to join a growing number of companies pulling ad dollars from the social media platform.
Advancing issues outnumbered decliners more than 3-to-1 on the NYSE and more than 2-to-1 on the Nasdaq.
The S&P index recorded no new 52-week high or low, while the Nasdaq recorded 35 new highs and 14 new lows.
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