NEW YORK (Reuters) – Wall Street surged on Wednesday as former Vice President Joe Biden’s strong showing in the “Super Tuesday” primary contests gave a boost to healthcare stocks and upbeat economic data helped sooth investors’ coronavirus anxieties.
All three major U.S. stock averages were at least 2.5% higher, with the S&P 500 having regained about 4.5% from Friday’s closing trough, but still about 8.8% below its all-time high reached on Feb 19.
Since then, the markets dove into a correction as the fast-spreading COVID-19 sparked widespread recession fears.
Former Vice President Joe Biden emerged as the front-runner for the Democratic presidential nomination following a string of primary victories, providing relief to market participants who are wary of rival Bernie Sanders’ more progressive policy positions.
“Today, clearly this is a Biden surge and maybe a bit of an opportunity to play a bounce given what happened in the markets yesterday,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.
This, after the U.S. Federal Reserve’s surprise 50 basis point interest rate cut to head off potential economic damage caused by the coronavirus, which has grown to 93,000 confirmed cases worldwide and rattled global markets.
“There may be a re-examination going on today,” Carlson added. “At least the Fed is indicating that they’re being supportive.”
But Carlson noted the coronavirus is likely remain an overhang through the first half of the year. “Markets don’t like uncertainties and this is about as uncertain a situation as I’ve seen in some time,” he said.
On the economic front, data showed stronger-than-expected private sector hiring, and the services sector expanding at its fastest pace in a year, according to reports from ADP and the Institute for Supply Management, respectively.
Additionally, the Mortgage Bankers Association reported that the average 30-year fixed contract mortgage rate fell last week to a seven-year low.
The Dow Jones Industrial Average .DJI rose 818.85 points, or 3.16%, to 26,736.26, the S&P 500 .SPX gained 85.86 points, or 2.86%, to 3,089.23 and the Nasdaq Composite .IXIC added 224.57 points, or 2.59%, to 8,908.66.
All of the 11 major sectors in the S&P 500 were firmly in the black, led by a 4.5% jump in healthcare .SPXHC stocks.
Fourth-quarter earnings season is crossing the finish line, with 488 S&P 500 companies having reported. Of those, 70.1% have beaten consensus estimates, according to Refinitiv data.
Dollar Tree Inc (DLTR.O) forecast underwhelming first-quarter sales and profit, sending the discount retailer’s shares down 3.3%.
Among apparel retailers, Abercrombie & Fitch Co (ANF.N) jumped 9.3% after beating quarterly sales and profit estimates.
But Nordstrom (JWN.N) forecast 2020 profit below analyst estimates, sending its shares down 3.2%.
Campbell Soup Co’s (CPB.N) beat-and-raise earnings report gave a 7.3% boost to its shares.
Advancing issues outnumbered declining ones on the NYSE by a 3.98-to-1 ratio; on Nasdaq, a 2.95-to-1 ratio favored advancers.
The S&P 500 posted 4 new 52-week highs and 31 new lows; the Nasdaq Composite recorded 33 new highs and 115 new lows.
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