Wednesday’s Stock Market Open: US Equities Rise As Curfews Seek To Curb Street Protests

Update: 12:05 p.m. EDT:

U.S. stocks climbed higher by Wednesday noon.

The Dow Jones Industrial Average gained 418.81 points to 26,161.46, while the S&P 500 rose 35.63 points to 3,116.45 and the Nasdaq Composite Index climbed 60.24 points to 9,668.61.

In Europe markets surged, as Britain’s FTSE-100 gained 2.61%, while France’s CAC-40 rose 3.36% and Germany’s DAX jumped 3.88%.

The Institute for Supply Management said on Wednesday that its non-manufacturing activity index rose to 45.4 in May, up from 41.8 in April.

The Commerce Department said on Wednesday factory orders fell 13% in April, versus an 11% drop in March.

Original story:

U.S. stocks opened higher on Wednesday as traders took solace from a better-than-expected ADP private payroll report as major cities slapped curfews to halt mass protests.

The Dow Jones Industrial Average gained 230.74 points to 25,973.39, while the S&P 500 rose 22 points to 3,102.82 and the Nasdaq Composite Index climbed 41.61 points to 9,649.99.

Private companies cut another 2.76 million workers in May, according to a report from ADP. The manufacturing sector alone cut 719,000 jobs. But this figure was far below the 8.75 million cuts expected by economists, and dramatically lower than the historic 20.2 million cuts seen in April.

“The impact of the Covid-19 crisis continues to weigh on businesses of all sizes,” said Ahu Yildirmaz, co-head of the ADP Research Institute. “While the labor market is still reeling from the effects of the pandemic, job [losses] likely peaked in April, as many states have begun a phased reopening of businesses.”

Although demonstrators continue to protest the killing of unarmed black man George Floyd, some major cities including New York and Chicago have established curfews to curb mass gatherings.

The Mortgage Bankers Association reported that mortgage applications to buy a home rose by 5% last week and were up 18% from a year ago.

“The pent-up demand from homebuyers returning to the market continues to support a recovery from the weekly declines observed earlier this spring,” said Joel Kan, an MBA economist. “However, there are still many households affected by the widespread job losses and current economic downturn. High unemployment and low housing supply may restrain a more meaningful rebound in purchase applications in the coming months.”

Unemployment in the euro zone rose to 7.3% in April from 7.1% in March.

“Despite several issues of importance -- national riots, Chinese relations, an ongoing pandemic -- the stock market is primarily focused on a single thing: the restart of U.S. and global economic activities,” said Jim Paulsen, chief investment strategist at the Leuthold Group. “The broader stock market (i.e., small cap stocks, cyclical sectors, international stock markets and emerging stock markets) is increasingly participating more pronouncedly in this rally suggesting the recession is ending.”

Jeremy Siegel, professor of finance at the Wharton School of the University of Pennsylvania, said the rally still can be sustained due to huge support from the Federal Reserve.

“I think this rally has further to go. It has all those doubters there but it’s the liquidity that the Fed provided that I think is the prime determinant,” Siegel said.

“If I look at the markets, I see a V-shaped recovery,” said Mark Mobius, co-founder at Mobius Capital Partners. “What we’re hearing from companies around the world is that once the lockdown is over, they’re going to get the customers coming back in droves.”

Overnight in Asia, markets finished higher. The Shanghai Composite edged up 0.07%; Hong Kong’s Hang Seng rose 1.37%; while Japan’s Nikkei-225 gained 1.29%.

In Europe markets traded higher, as Britain’s FTSE-100 gained 1.37%, while France’s CAC-40 rose 2.26% and Germany’s DAX jumped 2.59%.

Crude oil futures slipped 0.08% at $36.78 per barrel, Brent crude dropped 0.83% at $39.24. Gold futures fell 1.39%.

The euro gained 0.32% at $1.204 while the pound sterling rose 0.2% at $1.2575.