Monday’s Stock Market Open: US Equities Surge In Rebound From Last Week, Powell Mildly Bullish On Economy, Oil Jumps

Update: 12:05 p.m. EDT:

U.S. stocks were robustly higher as of noon Monday.

The Dow Jones Industrial Average rose 818.41 points to 24,503.83, while the S&P 500 gained 87.40 points to 2,951.10 and the Nasdaq Composite Index advanced 215.97 points to 9,230.53.

In Europe markets surged, as Britain’s FTSE-100 gained 4.29%, while France’s CAC-40 climbed 5.16% and Germany’s DAX rose 5.67%.

The National Association of Home Builders/Wells Fargo housing market index (which measures builders confidence) rose by 7 points in May to 37, after a historic plunge in April.

“The designation of home construction as an essential business during the [coronavirus] crisis helped keep most residential construction workers on the job, which is reflected in the May [index], NAHB stated. “At the same time, builders are showing flexibility in this new business environment by making sure buyers have the knowledge and access to the homes they are seeking through innovative measures such as social media, virtual tours and online closings.”

Original story:

U.S. stocks rose on Monday after Federal Reserve Chairman Jerome Powell said the U.S. economy will recover from the coronavirus pandemic. Also, biotech firm Moderna (MRNA) reported some promising news on its Covid-19 vaccine.

The Dow Jones Industrial Average rose 688.92 points to 24,374.34, while the S&P 500 gained 70.44 points to 2,934.14 and the Nasdaq Composite Index advanced 164.43 points to 9,178.99.

Moderna said on Monday morning that its early-stage human trial for a coronavirus vaccine produced Covid-19 antibodies in all 45 participants of the trial.

Speaking about the U.S. economy and Fed policy, Jerome Powell said on Sunday night’s broadcast of CBS’ “60 Minutes” program: “There’s a lot more we can do. We’ve done what we can as we go. But I will say that we’re not out of ammunition by a long shot. No, there’s really no limit to what we can do with these lending programs that we have.”

However, Powell also said the U.S. economy could contract by up to 30% in the second quarter, while the jobless rate may reach as high as 25%.

But he expects a recovery in the third quarter, thereby avoiding a Depression scenario.

“I don’t think [a second Depression is] a likely outcome at all. There’re some very fundamental differences,” he said. “I think there’s a good chance that there’ll be positive growth in the third quarter. And I think it’s a reasonable expectation that there’ll be growth in the second half of the year. I would say though we’re not going to get back to where we were quickly. We won’t get back to where we were by the end of the year. That’s unlikely to happen.”

Powell added: “So in the long run, I would say the U.S. economy will recover. We’ll get back to the place we were in February; we’ll get to an even better place than that. I’m highly confident of that. And it won’t take that long to get there.“

On Friday, the Atlanta Fed predicted a 42.8% plunge in the second quarter for the U.S. economy.

Most states have started to partially reopen their economies.

“With the worst of the pandemic likely behind us, central bank-supported equity markets are unlikely to retest their lows,” said Seema Shah, chief strategist at Principal Global Investors. “Yet, while reopening momentum may well carry risk assets a bit higher over the near term, the tepid economic recovery and deep uncertainty over the virus outlook argue against a pivot to more risk-on positioning.”

Overnight in Asia, markets climbed higher. The Shanghai Composite edged up 0.24%; Hong Kong’s Hang Seng gained 0.58%; while Japan’s Nikkei-225 rose 0.48%.

In Europe markets jumped higher, as Britain’s FTSE-100 gained 3.18%, while France’s CAC-40 climbed 3.87% and Germany’s DAX rose 4.2%.

Crude oil futures soared 10.84% at $32.62 per barrel, Brent crude rose 6.89% at $34.74. Gold futures slipped 0.39%.

The euro edged up 0.26% at $1.0846 while the pound sterling gained 0.64% at $1.2184.