Wall Street keeps rallying; S&P 500 back within 2% of record
Wall Street’s big rally keeps rolling, and the S&P 500 rose for a fourth straight day Wednesday to sit just 1.7% below its record.
The Standard & Poor’s 500 climbed 21.26 points, or 0.6%, to 3,327.77, echoing gains for stocks across Europe and Asia. If the U.S. market has just a few more days like that, it will erase the last of the historic losses it’s taken since February because of the COVID-19 pandemic and the recession it caused.
The Dow Jones industrial average rose 373.05 points, or 1.4%, to 27,201.52, and the Nasdaq composite added 57.23 points, or 0.5%, to set another record at 10,998.40.
Much of Wall Street’s focus this week has been on Washington, where Congress and White House officials are negotiating on more aid for an economy that’s shown some improvement but is still hobbling. Investors say such a package is crucial and needs to arrive quickly, with millions of Americans still out of work and $600 in weekly unemployment benefits from the U.S. government having recently expired.
Treasury Secretary Steven T. Mnuchin said late Tuesday that the two sides set a goal of reaching an agreement by the end of the week to permit a vote next week, though negotiators said the two sides remain far apart on key issues.
The pressure on Washington to act quickly is mounting. A report on Wednesday suggested that hiring was far weaker last month than economists expected. Private employers added just 167,000 jobs, according to a survey by payroll processor ADP, well below the 1.2 million that economists had forecast.
It highlights the damage that a resurgence in coronavirus cases across much of the country is doing to the economy. It also puts an even brighter spotlight on Friday’s more comprehensive jobs report coming from the Labor Department.
Walt Disney Co. rose 8.8% for one of the biggest gains in the S&P 500 after the media giant reported a profit for the spring that beat Wall Street’s expectations, although it was down sharply from a year earlier.
Prudential Financial rose 6.2%, helping to drive the financial sector to one of the market’s bigger gains, after it likewise reported results that weren’t as bad as analysts had forecast.
That’s been the trend across much of the market this reporting season. Stocks have continued to climb even though S&P 500 companies appear to be on track to report a roughly 34% drop in earnings per share from a year earlier, according to FactSet. That’s in part because investors had prepared for an even steeper drop.
Investors are betting that the plunge in profits will prove to be only temporary and that earnings will recover as economies reopen and a vaccine for the new coronavirus hopefully gets developed to help the world get closer to normal.
Shares of biotech company Novavax jumped 10.4% after it reported data on its COVID-19 vaccine candidate. Analysts cautioned not to over-interpret the data but called it encouraging.
A better-than-expected reading on the nation’s services sector also added to the mixed picture on the economy. The services sector includes retail, healthcare and transportation, and it makes up the bulk of the U.S. economy. It grew in July for the second straight month, according to a survey by the Institute for Supply Management, and accelerated when economists were expecting a slight slowdown.
Even within that report, though, were seeds of concern. Growth in new orders helped to drive the reading higher, but employment trends in the report weren’t as encouraging.
Treasury yields rose, reclaiming some of their lost ground from a day before when they sank to a nearly five-month low. The yield on the 10-year Treasury climbed to 0.54% from 0.51% late Tuesday.
Yields have remained very low as investors have continued to worry about the weak economy and as the Federal Reserve has unleashed massive amounts of stimulus.
Gold rose even further into record territory, continuing its strong climb since the spring amid nervousness about the economy and super-low interest rates. Gold for delivery in December, the most actively traded contract, rose $28.30 to settle at $2,049.30 per ounce.
In Europe, Germany’s DAX returned 0.5%, and France’s CAC 40 rose 0.9%. The FTSE 100 in London added 1.1%.
In Asia, Japan’s Nikkei 225 slipped 0.3%, but South Korea’s Kospi added 1.4%. Hong Kong’s Hang Seng rose 0.6%, and stocks in Shanghai inched up 0.2%.
Benchmark U.S. crude rose 49 cents to settle at $42.19 per barrel. Brent crude, the international standard, added 74 cents to $45.17 a barrel.