Stocks added to early gains Wednesday after Sen. Bernie Sanders dropped out of the U.S. presidential race.
A strong showing by former Vice President Joe Biden in the Democratic primaries buoyed investors who view him as a more business-friendly alternative to Sanders, a strong critic of Wall Street.
The Dow Jones industrial Average climbed nearly 600 points, a day after it suffered its worst intraday reversal since 2008. The Standard & Poor’s 500 rose 2.2%, driven by gains in beaten down energy, technology and financial shares.
Stocks opened higher Wednesday on hopes the number of new coronavirus cases is beginning to fall. Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, told Fox News Wednesday the U.S. death toll from the virus was lower than initially thought. U.S. health officials are planning ways for Americans to return to normal activities if social distancing measures are successful in curbing the outbreak, he said.
“If in fact we are successful, it makes sense to at least plan what a re-entry into normality would look like,” Fauci said. “That doesn’t mean we’re going to do it right now, but it means we need to be prepared to ease into that.”
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The U.S. coronavirus death toll neared 13,000 early Wednesday. The U.S. approached 400,000 confirmed cases Wednesday morning, according to the Johns Hopkins University data dashboard. Worldwide, there are 1.4 million confirmed cases and more than 83,000 deaths.
To be sure, Wall Street’s brief rally on Tuesday proved short-lived in a market dominated by sharp swings responding to the ups and downs of the news about the pandemic. Even though economists say a punishing recession is inevitable, some investors are hoping a peak in new infections might provide clues about how long and durable the downturn might be.
First quarter earnings season is slated to kick off next week with the release of results from several banks. Analysts expect profit growth at S&P 500 companies to decline 5.2% from a year ago, according to FactSet. Investor focus will be on tone and mindset around how companies may operate during the remainder of 2020.
“The stock market is at a very uncertain point now,” Nancy Davis, chief investment officer of Quadratic Capital, said in a note. “The impact of the coronavirus on future earnings is yet to be determined. We aren’t out of the woods.”
While many investors are preoccupied with the pandemic, energy remains another major factor driving trading.
Benchmark U.S. crude oil rose 81 cents to $24.44 a barrel Wednesday in electronic trading on the New York Mercantile Exchange. It got a boost from comments by President Donald Trump to Fox TV that he expects Russia and Saudi Arabia to resolve their price war.
U.S. crude had fallen $2.45, or 9.4%, to settle at $23.63 per barrel Tuesday. It started the year above $60 per barrel.
“Falling oil prices are hurting profits,” Terry Sandven, chief equity strategist at U.S.Bank Wealth Management, said in a note. “Low energy prices add stress to highly-leveraged energy companies and banks with significant exposure to the oil industry.”
An OPEC meeting is due to be held on Thursday. It was delayed amid bickering between Saudi Arabia and Russia following a meeting in March where OPEC and other nations led by Russia failed to agree to a production cut to reflect collapsing demand due to the pandemic. Prices then plunged.
France’s CAC 40 index dropped 1.5% after the national central bank said the economy was in recession and was estimated to have contracted by 6% in the first quarter. Germany’s DAX slipped 0.9% and Britain’s FTSE 100 shed 1.2%.
Japan’s Nikkei 225 gained 2.1% to 19,353.24, on stronger than expected machinery orders. Hong Kong’s Hang Seng fell 1.2% and the Shanghai Composite dipped 0.2%.
Contributing: The Associated Press