U.S. stocks rose Monday, as investors braced for another volatile week following a surge of infections from the deadly coronavirus pandemic.
The Dow Jones industrial average climbed 50 points, adding to recent gains after the blue-chip average notched its best week since 1938. The Standard & Poor’s 500 added 1%, as declines in energy stocks were offset by gains elsewhere in health care shares. Energy companies came under pressure as the price of oil briefly sank below $20 a barrel for the first time since 2002.
Shares of Johnson & Johnson jumped 4% after the health care conglomerate said human testing of its experimental vaccine for the coronavirus will begin by September, and it could be available for emergency use in early 2021.
Traders say that stocks could get another boost over the coming days as money managers rebalance their portfolios toward stocks into the end of the quarter. But analysts caution that the recent rally could fade if coronavirus infections continue to climb.
“Last week’s rally was driven by the relief that governments and central banks had put in place measures to support businesses and the unemployed,” Adrian Lowcock, head of personal investing at investment platform Willis Owen, said in a note. “This week the challenge is far greater, as investors consider how to respond amid a likely uptick in bad news flow as the virus escalates and the economic outlook gets worse.”
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Investors will monitor employment data and manufacturing gauges this week for further indications on how the pandemic has affected the U.S. economy. The damage from the virus to corporate profits, the ultimate driver of stock prices, remains uncertain.
Stock futures slumped late Sunday after President Donald Trump extended the national social distancing guidelines to April 30 as the U.S. death total stood at more than 2,500 people, with more than 143,000 confirmed cases, according to the Johns Hopkins University data dashboard.
The announcement came after Trump said last week he hoped to open up the country by Easter. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, projected between 100,000 and 200,000 people could die from the virus. The global death count was nearing 34,000 late Sunday, with more than 700,000 confirmed cases.
Analysts and traders say that investors are looking for the number of infections to slow before markets can find a bottom.
“Stocks will likely trade in a narrow trading range unless this situation gets significantly better or worse,” says Joe Conroy, founder of Maryland-based Harford Retirement Planners. “If we start to see the infection numbers top out, we could see a bottoming process in the stock market.”
Energy stocks slumped Monday as oil prices hit an 18-year low. Shares of Occidental Petroleum and ConocoPhillips shed 9% and 5%, respectively.
U.S. benchmark crude dropped $1.19 to $20.32 per barrel in electronic trading on the New York Mercantile Exchange. It earlier traded briefly below $20 a barrel, the lowest since early 2002. Investment bank Goldman Sachs has forecast that it will trade consistently below $20 a barrel in the next two months because storage will be filled to the brim and wells will have to be shut in.
Brent crude, the international standard, gave up $1.61 to $26.34 per barrel.
The yield on the 10-year Treasury slipped to 0.65% from 0.68% late Friday. Lower yields signal lackluster expectations for economic growth.
In Europe, Germany’s DAX was down 0.2% while the CAC 40 in Paris lost 1%. Britain’s FTSE 100 declined 0.8%. Tokyo’s Nikkei 225 lost 1.6%, while the Shanghai Composite shed 0.9%. The Hang Seng in Hong Kong slipped 1.3% to 23,175.11.
Contributing: The Associated Press