U.S. stocks surged into Thursday’s close, led by a rally in bank stocks ahead of the results of the Federal Reserve’s latest stress tests. The late-day jump partly reverses losses seen Wednesday as investors worried about climbing coronavirus cases in the U.S.
More than 36,000 new cases were reported on Wednesday—an increase that is prompting businesses across the country to rethink or halt their reopening strategies, while state and local officials reimpose some restrictions. Those moves and any that follow will make it all the more difficult for the U.S. economy to recover. Plenty of news to that affect emerged on Thursday, including Texas pausing its reopening plans and Walt Disney (ticker: DIS) delaying letting customers back into its U.S. theme parks.
Stocks opened down, but quickly recovered. They spent the rest of the session bouncing around the break-even line before rallying into the closing bell.
The Dow Jones Industrial Average closed up 300 points, or 1.2%, after being down more than 200 points in the morning. The S&P 500 finished 1.1% higher after being down 0.8% shortly after the opening bell. The Nasdaq Composite also climbed 1.1% and the Russell 2000 gained 1.7%. Each index had lost more than 2% on Wednesday.
Bank stocks including J.P. Morgan (JPM), Wells Fargo (WFC), and Bank of America (BAC) all rose at least 3.5% today.
Before the market opened on Thursday, the latest figures on employment highlight the challenge still facing the U.S. economy. Government data showed that 1.48 million people in the U.S. filed initial claims for unemployment benefits in the latest week, while 19.5 million continue to claim benefits. Last week’s release said that roughly 20 million workers continue to receive unemployment benefits, which is still near historically high levels.
In the afternoon, the U.S. Senate passed a bill with bipartisan support that would sanction Chinese officials and businesses that are found to act against the autonomy of Hong Kong. China’s central government recently passed a new security law that allows it greater oversight of the semi-autonomous territory.
The Nikkei 225 in Tokyo dropped 1.2% and the Kospi Composite lost 2.3% in Seoul. Chinese and Hong Kong markets were closed on Thursday.
Markets in Europe also wavered between positive and negative territory. The Stoxx Europe 600 closed up 0.7%, while Germany’s DAX added 0.7%, France’s CAC 40 rose 1%, and the U.K.’s FTSE 100 ticked up 0.4%.
“Uncertainties surrounding the pandemic and a possible return of the trade conflict—a dangerous combination for stock markets,” said Milan Cutkovic, market analyst at AxiCorp. “Investors should, therefore, be prepared for major mood and price swings.”
Oil also retraced early losses. The price of West Texas Intermediate was up 1.9%, to $38.72 a barrel, while Brent crude, the main international market benchmark, rose 1.8% to $41.05.
Haven assets were mixed. The yield on the 10-year U.S. Treasury note fell 1 basis point, or hundredth of a percentage point, to 0.674%, as the price of the securities rose. The U.S. Dollar Index (DXY)—which measures the greenback against a basket of other currencies—ticked up 0.2%. The price of gold slipped 0.2%, to $1,762.10 an ounce, after rising strongly in recent days to its highest levels since 2012.
Disney stock fell 0.6% after it announced a delay to the reopening of its California theme parks due to increasing coronavirus cases. Many had been hopeful about the parks’ reopening, seeing it as a sign that the U.S. was through the worst of the pandemic.
Darden Restaurants (DRI) shares climbed 5.3% after management reported lower-than-expected losses for its fiscal fourth quarter. Darden, which owns Olive Garden, LongHorn Steakhouse, and other chains, said same-store sales fell 47.7% at its restaurants.
McCormick & Company (MKC) shares closed up 3.6%. The maker of spices and condiments reported better-than-expected sales figures as households continue to stay at home and prepare their own food.
In international markets, the airline sector was in focus. Lufthansa surged on news its top shareholder will vote in favor of a bailout package, while easyJet dropped after selling £419 million of discounted shares. Australia’s Qantas said it plans to cut at least 6,000 jobs and keep 15,000 more workers on extended furloughs.
Write to Carleton English at carleton.english@dowjones.com, Nicholas Jasinski at nicholas.jasinski@barrons.com and Steve Goldstein at steven.goldstein@wsj.com
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June 26, 2020 at 03:31AM
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Stocks Close Higher Despite Virus Fears - Barron's
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