By Stan Choe and Alex Veiga
Stocks shot 3.4% higher on Wall Street Wednesday as investors chose to focus on the optimistic side of data about the coronavirus outbreak’s trajectory. It’s the latest about-face in this brutally volatile stretch for the U.S. stock market, which has flip-flopped between gains and losses for six straight days. The up moves have recently been bigger than the downward swings, though, amid signs that deaths and infections may be nearing a peak or plateau in some of the world’s hardest-hit areas. The S&P 500 has jumped nearly 23% since it hit a low two and a half weeks ago.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story is below:
Stocks are shooting higher again on Wall Street Wednesday. Maybe this time it will last.
The S&P 500 was up roughly 3% in afternoon trading as investors focused on the optimistic side of data about the coronavirus outbreak's trajectory, and the gains accelerated through the day. Trading remained unsettled around the world, though, with European and Asian stock markets mixed. A day before, an even bigger gain for the S&P 500 suddenly vanished in the afternoon.
Markets have been incredibly volatile in recent weeks as investors guess at how badly the coronavirus outbreak will hurt corporate profits. The economic damage is widespread, and France’s central bank said its economy entered a recession with a 6% drop in the first three months of the year.
Countering that is unprecedented aid from governments and central banks. Some investors are also pointing to nascent signs that infections and deaths may soon be peaking or plateauing in several hotspots around the world. Dr. Anthony Fauci, the top U.S. infectious diseases expert, said Wednesday that the White House is working on plans to eventually reopen the country amid “glimmers of hope," and President Donald Trump said it “will be sooner rather than later."
Caught between those forces are investors, who have sent the S&P 500 down about 20% from its record set in February. Earlier, it had fallen as much as a third from that mark, reflecting investors’ expectations for a steep, sudden recession. Where stocks go from here depends on how long it takes for the economy to reopen and get closer to what used to be normal.
The S&P 500 was up 3.1%, as of 2:39 pm. Eastern time. The Dow Jones Industrial Average rose 680 points, or 3%, to 23,335 and the Nasdaq was up 2.3%.
“It’s positive that people are talking about reopening the economy,” said Jeff Buchbinder, equity strategist for LPL Financial. “The White House has been talking about that. The more we can focus on what the economy will look like several months out, the better it will be for markets.”
Stocks that have been beaten down the most since the sell-off began in February were leading the market, including energy companies, retailers and travel-related companies. That was also the early trend of Tuesday before the gains vanished.
Gap rose 11.7%, United Airlines gained 9.9% and Marathon Petroleum was up 9.4% as investors envisioned people shopping again at stores, flying for vacations and driving to the office once stay-at-home orders are relaxed. All three, though, are still down more than 50% for 2020 so far.
Shares of health insurers and other stocks got an extra boost after Bernie Sanders suspended his presidential campaign. Investors had been wary of Sanders' proposal of “Medicare For All” and other plans that could have restricted profits.
UnitedHealth rose 6.1% after being down in the morning, and Anthem jumped 8.8%.
Another bounce came in the afternoon after the Federal Reserve released minutes from its meeting last month, where it slashed short-term interest rates back to nearly zero. The minutes confirmed expectations that the Fed will do “whatever it takes” to support markets, according to Bob Miller, head of Americas fundamental fixed income at BlackRock.
Treasury yields, which signaled worries about the economic damage coming from the coronavirus outbreak earlier than the stock market, were relatively steady. The yield on the 10-year Treasury ticked up to 0.75% from 0.73% late Tuesday.
Uncertainty, though, is still the dominant force in markets. The World Trade Organization said global trade could fall anywhere from 13% to 32% this year. The wide range was due to how unpredictable the pandemic is.
Companies are also preparing to report their financial results for the first three months of the year in the upcoming weeks. The numbers are likely to be bleak, but investors don't know how long that will last. McDonald's on Wednesday pulled its forecast for restaurant growth, sales and other measures for 2020 and the long term, citing the uncertainty created by the pandemic.
In Europe, stocks dipped after finance ministers clashed over a proposal to collectively combat the health crisis. Countries that have been hardest hit there by COVID-19 are also among those that can least afford to pay for it, such as Italy and Spain. But the outbreak is dragging on economies across the continent. German economists predict its economy will shrink 4.2% this year.
Germany’s DAX slipped 0.2%, and France’s CAC 40 rose 0.1%. The FTSE 100 in London lost 0.5%.
Trading in Asia was more mixed.
Japan’s Nikkei 225 rose 2.1%, while stocks in South Korea fell 0.9% and Hong Kong lost 1.2%.
Benchmark U.S. crude oil rose $1.54, or 6.5%, to $25.17 a barrel Wednesday, recovering some of its 9.4% slide from the prior day. Oil prices have been even more volatile than stocks recently as Russia and Saudi Arabia argue about whether to cut production in the face of withering demand. Oil producers are set to meet on Thursday, and an announcement for production cuts to prop up the price of crude is possible.
Brent crude, the international standard, gained $1.32 to $33.19.
More than 1.4 million cases of COVID-19 have been confirmed around the world, with more than 399,000 of them in the United States.
For most people the virus causes mild to moderate symptoms such as fever and cough. But for some older adults and those with existing health problems, it can cause pneumonia and death. More than 83,000 people have died, while over 308,000 have recovered, according to a tally by Johns Hopkins University.
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AP Business Writer Yuri Kageyama contributed.
