U.S. Stocks Move Sharply Higher, Nasdaq Hits Three-Month Closing High

Following the sharp pullback seen late in the previous session, stocks showed a strong move back to the upside during trading on Wednesday. With the upward move, the tech-heavy Nasdaq ended the session at its best closing level in three months.

The major averages finished the session off their best levels of the day but still sharply higher. The jumped 369.04 points or 1.5 percent to 24,575.90, the Nasdaq spiked 190.67 points or 2.1 percent to 9,375.78 and the S&P 500 surged up 48.67 points or 1.7 percent to 2,971.61.

The rally on Wall Street partly reflected continued optimism about an economic recovery as states begin to reopen following the coronavirus-induced lockdowns.

Early indications suggest the states that have reopened have not seen a spike in coronavirus cases, which has led to hopes the economy may rebound more quickly than many economists predict.

Meanwhile, traders largely shrugged off a report raising doubts about Moderna’s (MRNA) potential coronavirus vaccine.

The report from STAT News questioned the validity of the results of Moderna’s vaccine trial that had sent stock markets soaring on Monday.

Positive sentiment was also generated in reaction to earnings news from Lowe’s (LOW), with the home improvement retailer reporting first quarter results that exceeded analyst estimates on both the top and bottom lines.

At the same time, the minutes of the Federal Reserve’s latest monetary policy meeting highlighted concerns about the extraordinary amount of uncertainty and considerable risks to economic activity created by the coronavirus pandemic.

The minutes said participants at the late-April meeting discussed several alternative scenarios with regard to the behavior of economic activity in the medium term that all seemed about equally likely.

“These scenarios differed in the assumed length of the pandemic and the consequent economic disruptions,” the Fed said.

A number of participants believed there was a substantial likelihood of additional waves of the coronavirus outbreak, which could lead to further economic disruptions.

Sector News

Energy stocks helped to lead the way higher on the day, benefiting from a continued increase by the price of crude oil. Crude for July delivery jumped $1.53 to $33.49 a barrel, moving higher for the fifth straight session.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index spiked by 6.4 percent, the NYSE Arca Oil Index soared by 4 percent and the NYSE Arca Natural Gas Index surged up by 2.7 percent.

Significant strength was also visible among semiconductor stocks, as reflected by the 3.7 percent jump by the Philadelphia Semiconductor Index. The index ended the session at a three-month closing high.

Transportation, financial, networking and computer hardware stocks also saw considerable strength, while gold stocks were among the few groups to buck the uptrend despite an increase by the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan’s Nikkei 225 Index climbed by 0.8 percent, while China’s Shanghai Composite Index fell by 0.5 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the German DAX Index surged up by 1.3 percent, the U.K.’s FTSE 100 Index jumped by 1.1 percent and the French CAC 40 Index advanced by 0.9 percent.

In the bond market, treasuries moved higher following the Treasury Department’s first auction of twenty-year bonds since 1986. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.1 basis points to 0.680 percent.

Looking Ahead

The Labor Department’s weekly jobless claims report is likely to attract attention on Thursday, potentially overshadowing reports on Philadelphia-area manufacturing activity, existing home sales, and leading economic indicators.

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