Stock Market Rockets to Highest Level in Weeks
Wall Street shrugged off its gloom Wednesday as the stock market’s most famous index stormed across the 23,000-point barrier for the first time since March 13.
The Dow Jones industrial average rose to 23,433.57, an increase of 779.71 points or 3.44 percent, according to Business Insider.
The Standard & Poor’s 500 index rose 3.4 percent, bringing it to a collective 23 percent gain since it hit bottom in mid-March, The New York Times reported.
“Markets appear to be weighing the good with the bad,” Mike Loewengart, managing director of investment strategy at E-Trade Financial, told Bloomberg. “In lieu of real-time economic data, we’re seeing the markets latch onto signs of optimism around the pandemic.”
In its reporting on the jump, Reuters stressed two things: a hope that the coronavirus pandemic is peaking, and the withdrawal of Sen. Bernie Sanders of Vermont from the Democratic presidential race.
“Sanders’ exit removes the tail risk of some of his policies, immediately sets up focus on Biden vs. Trump,” Ed Mills, Washington policy strategist at Raymond James, told CNBC. With Sanders out of the race, no one is left to oppose former Vice President Joe Biden in his quest for the Democratic presidential nomination.
“Biden’s policies will get a new scrutiny now he is the presumptive nominee, but the truth of the matter is that the market will be looking towards Washington more to help the economy and much of the assistance matches his platform.”
Other commentators said that optimistic talk about coronavirus cases peaking spurred Wall Street.
“The key focus of ‘peak.’ That seems to be on every investor’s mind right now is when will coronavirus cases peak,” Eric Freedman, chief investment officer at U.S. Bank Wealth Management in North Carolina, told Reuters.
“At some point the economic considerations really start to materialize. Plus, what will that transmission mechanism be for the economy, meaning in what phase will the economy be restarted,” he said.
Investors are now sensing changes in the air, one commentator said.
“If the curve is bending, for the first time, some time-line is coming into focus for restarting at least parts of the economy,” Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC.
“This means investors can start to reduce their best guesses as to how long this recession will last and even if the recession is very deep, if its duration can be shortened and known with some greater clarity, this would tend to raise the value of the stock market.”
One commentators said investors want to be in position when the recovery starts.
“If you wait until the coast is clear, you will have missed a huge part of the gains,” Matt Maley, chief market strategist at the trading and asset management firm Miller Tabak, told The Times. “And professional investors can’t afford to do that.”
One commentator said that the tone of the discussion about reopening the economy is important in a hope-starved nation.
“It’s positive that people are talking about reopening the economy,” Jeff Buchbinder, equity strategist for LPL Financial, told the Pittsburgh Post-Gazette.
“The White House has been talking about that. The more we can focus on what the economy will look like several months out, the better it will be for markets.”
Others suggested that after nearing bottom, there is no place for the economy to go but up.
“The market is obsessively focused on the issue at hand; not just the number of new cases, which seems to be slowing down, but also increasing signs of getting back to normal in economic activity,” Jeffrey Keintop, chief global investment strategist at Charles Schwab, told CNBC.
“The idea that this economic freefall is actually close to finding a bottom, I think, is the bigger driver for optimism in the markets,” he added.
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