Tuesday’s Stock Market Close: US Equities Rally On Hopes For Covid-19 Vaccines, States Reopening

U.S. stocks surged on Tuesday as traders welcomed the reopening of more businesses across the U.S. along with optimism over potential new covid-19 vaccines. Some economic data suggested that the worst economic impact of the pandemic have already been reached.

The Dow Jones Industrial Average surged 529.95 points to 24,995.11, while the S&P 500 gained 36.32 points to 2,991.77 and the Nasdaq Composite Index rose 15.63 points to 9,340.22.

The S&P 500 broke above the 3,000 mark for the first time since early March before closing slightly below that level.

Tuesday’s volume on the New York Stock Exchange totaled 4.91 billion shares with 2,489 issues advancing, 42 setting new highs, and 475 declining, with three setting new lows .

Active movers were led by Hertz Global Holdings Inc. (HTZ), General Electric Co. (GE) and American Airlines Group Inc. (AAL).

Biotech firm Novavax (NVAX) said it commenced the first human study of its experimental coronavirus vaccine and expects initial results in July. All told, there are now 10 covid-19 vaccines in clinical evaluation and 114 in pre-clinical evaluation.

President Donald Trump cheered Tuesday’s rally, by tweeting: “Stock market up big, Dow crosses 25,000. S&P 500 over 3,000. States should open up ASAP. The transition to greatness has started, ahead of schedule. There will be ups and downs, but next year will be one of the best ever!”

The New York Stock Exchange reopened its trading floor on Tuesday after a two-month closure, but with strict new rules.

The Commerce Department said new home sales unexpectedly rose by 0.6% in April to a seasonally adjusted annual rate of 623,000 units.

The Conference Board’s consumer confidence index climbed to 86.6 in May from 85.7 in April.

“Following two months of rapid decline, the free-fall in confidence stopped in May,” said Lynn Franco, senior director of economic indicators at The Conference Board. “Short-term expectations moderately increased as the gradual reopening of the economy helped improve consumers’ spirits.”

Home prices rose by 1.7% quarter-over-quarter and by 5.7% year-over-year in the first quarter of 2020, according to the Federal Housing Finance Agency House Price Index

“Annual house price appreciation was stronger in the first quarter of 2020, compared to a year ago, driven by falling interest rates and declining inventories of homes for sale, over the second half of 2019 and early 2020,” said Lynn Fisher, deputy director of FHFA’s division of research and statistics.

The Chicago Fed National Activity Index dropped to minus-16.74 in April from minus-4.97 in March led by declines in production and employment.

Home prices in March rose 4.4% on an annual basis, up from 4.2% in February, according to the S&P CoreLogic Case-Shiller index.

“The virus appears to be coming under control,” said Bruce Bittles, chief investment strategist at Baird. “Lockdowns have been relaxed and we have not seen a resurgence in the virus. A return to a bull market in stocks and a return to economic growth are dependent in large part upon the containment of the virus which will allow businesses to reopen and consumers to resume their spending habits. The market seems to be pricing in a quick economic recovery (V-shape) which would help explain the recent rally.”

However, tensions between the U.S. and China continue to escalate.

Om Sunday, White House National Security Advisor Robert O’Brien warned the U.S. may impose sanctions on China if Beijing enacts restrictive new national security law in Hong Kong.

“One big threat to the recovery in markets is the escalating war of words between the U.S. and China,” said Shane Oliver, head of investment strategy at AMP Capital Investors in Sydney. “The main focus will likely remain on continuing evidence that the number of new Covid-19 cases is slowing in developed countries, progress towards medical solutions, the reopening of economies and signs that economic activity is picking up.”

Keith Buchanan, portfolio manager at GLOBALT, cautioned: “A lot of this [market activity] has evolved into a reopening story that’s been able to piggyback off some positive news from a therapeutics standpoint. [But] there are definitely questions about whether we are pricing in a return to a normal that, scientists are warning, could have a resurgence in the virus.”

Overnight in Asia, markets finished higher. The Shanghai Composite rose 1.01%; Hong Kong’s Hang Seng gained 1.88%; while Japan’s Nikkei-225 jumped 2.55%.

In Europe markets closed higher, as Britain’s FTSE-100 gained 1.24%, while France’s CAC-40 climbed 1.46% and Germany’s DAX rose 1%.

Crude oil futures jumped 2.53% at $34.09 per barrel, Brent crude slipped 0.33% at $36.62. Gold futures fell 1.79%.

The euro gained 0.82% at $1.0987 while the pound sterling rose 1.21% at $1.2334.

The yield on the 10-year Treasury surged 6.24% to 0.698% while yield on the 30-year Treasury jumped 4.96% to 1.439%.