Stocks erased early losses in afternoon trading Monday to close higher, after a rebound in oil prices fueled gains in energy stocks.
The Dow Jones Industrial Average was up 26 points, or 0.1%. The S&P 500 rose 0.4%, and the tech-centric Nasdaq Composite gained 1.2%. Small-cap stocks continued to underperform, with the Russell 2000 up just 0.2%. The small-cap index is down 24% so far this year, compared to the large-cap S&P 500’s 17% drop.
Major U.S. indexes sold off early in the session on the heels of sharp declines in overseas stocks, as some markets reopened after a three-day break. The Hang Seng dropped 4.2% in Hong Kong, and India’s Sensex fell 5.9%. The German DAX fell 3.6% and the French CAC 40 dropped 4.2%.
A rebound in oil prices and energy stocks helped push U.S. stocks higher toward the end of the trading session on Monday. Crude-oil futures gained 3.1% to close at $20.39 a barrel, driving the energy sector of the S&P 500 3.7% higher.
President Donald Trump said during his Sunday evening town hall meeting that the administration is “very confident” a coronavirus vaccine will be ready by year-end.
But he also said that the U.S. coronavirus death count could reach 100,000, a much higher number than previously cited. And on Monday the New York Times reported that some government figures are projecting fatalities will nearly double to hit 3,000 per day by early June.
The economic data points released on Monday were also downbeat. The Italian manufacturing purchasing managers index fell to a record low of 31.1 in April, and Spain’s manufacturing PMI dropped to 30.8. Any readings below 50 indicate deteriorating conditions. In the U.S., the Census Bureau reported that factory orders fell by more than expected in March.
Over the weekend, Warren Buffett’s Berkshire Hathaway (ticker: BRK.A) reported a $30 billion quarterly loss. The loss was large, in part, because accounting rules mandate Berkshire recognize stock-market fluctuations in its income statement. The S&P was down about 20% year to date through March 31. The declines hit Berkshire’s huge stock portfolio significantly. Berkshire stock was down 2.6%.
Buffett also said on Saturday that he sold his entire stake in U.S. airline stocks. Berkshire owned, roughly, between 8% and 10% of the four largest U.S. air carriers, and the news drove the stocks lower on Monday. United Airlines (UAL) shares fell 5.1%. American Airlines (AAL) stock declined 7.7%. Southwest Airlines (LUV) dropped 5.7%. Delta Air Lines slid 6.4%.
Investors sought safety in other commodities during oil’s Monday rally. Gold miner Newmont (NEM) shares rose 2.9%, as the precious metal gained 0.7%.
And some health care stocks developing Covid-19 treatments climbed as well. Vaccine developer Moderna (MRNA) stock advanced 5.4%. Roche (ROG.Switzerland) shares rose 0.6% after the FDA approved a Covid-19 antibody test.
Write to Alexandra Scaggs at alexandra.scaggs@barrons.com and Al Root at allen.root@dowjones.com
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May 05, 2020 at 03:32AM
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Stocks End Higher as Oil Prices Rebound - Barron's
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