Stocks rallied on Wall Street Monday as investors became hopeful that more progress was being made in getting countries past the worst of the coronavirus pandemic.
The Dow Jones Industrial average gained nearly 1,000 points by the end of trading, and the S&P 500 jumped 3.2%, erasing its losses from last week.
Both indexes posted their biggest gains in six weeks.
Investors welcomed signs that European countries were taking more steps to lift lockdowns. They were also cheered by word from a drug company that it had encouraging results in very early testing of an experimental coronavirus vaccine. Over the weekend, Federal Reserve Chair Jerome Powell expressed optimism that the U.S. economy could begin to recover in the second half of the year.
Stocks opened higher on Wall Street Monday, extending a global rally as the U.S. market bounces back from its worst week in two months.
The Dow closed up 911.95 or 3.85% to 24,597.37.
The NASDAQ composite index surged 220.27 or 2.44% to 9,234.83.
The S&P 500 finished up 90.21 to 2,953.91.
Over the weekend Federal Reserve Chair Jerome Powell expressed optimism that the U.S. economy could begin to recover in the second half of the year. Once the outbreak has been contained, he said, the economy should be able to rebound “substantially.”
Globally there was optimism that the American economy might start to recover this year from the coronavirus pandemic.
London and Frankfurt pushed higher, while benchmarks in Shanghai, Tokyo, Hong Kong and Australia advanced.
That came despite Japan’s announcement that its economy contracted in the first quarter and the Trump administration’s decision to step up a technology conflict with Beijing by tightening restrictions on Chinese tech giant Huawei.
Investors appear to be looking past the outbreak to a recovery despite rising infection numbers in the United States, Brazil and some other countries. Forecasters warn the latest market buoyancy might be premature and a return to normal could be some way off.
Market sentiment “will likely remain fragile” as investors weigh government stimulus plans against rising U.S.-Chinese tension and poor economic data, said Riki Ogawa of Mizuho Bank in a report.
In Europe, the FTSE 100 in London gained 2.4% to 5,936 and the DAX in Frankfurt advanced 2.9% to 10,766. France's CAC 40 rose 2.2% to 4,373.
In Asia, the Shanghai Composite Index rose 0.2% to 2,875.42 and Tokyo’s Nikkei 225 gained 0.5% to 20,133.73. The Hang Seng in Hong Kong advanced 0.6% to 23,934.77.
The Kospi in Seoul was 0.5% higher at 1,937.11 and Australia’s S&P-ASX 200 gained 1% to 5,460.50. India’s Sensex lost 2.6% to 30,310.56. Markets in New Zealand and Southeast Asia advanced.
Federal Reserve Chair Jerome Powell expressed optimism Sunday the U.S. economy can begin to rebound in the second half, assuming the coronavirus doesn’t erupt in a second wave. He said a full recovery won’t likely be possible before the arrival of a vaccine.
That appeared to encourage investors who are looking for signs of when global economies might return to normal.
In an interview with CBS’s “60 Minutes,” Powell said the U.S. economy was fundamentally healthy before the virus forced widespread business shutdowns and tens of millions of layoffs. Once the outbreak has been contained, he said, the economy should be able to rebound “substantially.”
The U.S. downturn was the result of an external event instead of problems such as the financial instabilities that led to the 2008 crisis, which may mean “we can get back to a healthy economy fairly quickly,” Powell said.
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Powell and Treasury Secretary Steven Mnuchin are due to appear Thursday before a Senate panel to report on recovery efforts.
“Expect policymakers to strike a more cautious tone, emphasizing that we are not out of the woods yet and that there will be more stimulus in the offing,” Stephen Innes of AxiCorp said in a report.
Meanwhile, Japan’s government reported Monday the world’s third-largest economy contracted by 0.9% in the three months ending in March compared with the previous quarter.
That “sharp fall” suggests there is “much worse to come” in the current quarter, Tom Learmouth of Capital Economics said in a report.
The White House added to trade uncertainty by tightening restrictions on Huawei Technologies Ltd. American officials say Huawei, one of the biggest makers of smartphones and network equipment, is a security risk, which the company denies.
Washington said non-U.S. companies that make processor chips for Huawei must obtain permission to use American technology, a move that threatens to disrupt sales. Huawei warned earlier that additional U.S. sanctions on the company might trigger Chinese government retaliation against American enterprises.
In energy markets, benchmark U.S. crude gained $2.78 to $32.21 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.87 to $29.43 on Friday. Brent crude, used to price international oils, advanced $2.08 to $34.58 per barrel in London. It rose $1.37 the previous session to $32.50.
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