U.S. stocks ticked up Wednesday, extending recent gains on hopes for a global economic recovery as more economies reopen after being shuttered due to the coronavirus pandemic.
The Dow Jones Industrial Average rose 5 points, after soaring more than 500 points a day earlier following data that showed U.S. retail spending was stronger than expected. The Standard & Poor’s 500 edged up 0.1%, putting the broad index on track for its fourth consecutive day of gains.
Global stock markets have regained most of this year’s losses as investors count on a rebound from the pandemic despite rising infections in the United States, Brazil and some other major countries.
Investors have been pushing up shares of companies that would benefit from a reopening economy including airlines and retailers. Technology companies also rose Wednesday, with Apple, Amazon and Netflix climbing at least 1% apiece.
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Analysts warn the gains are bigger and faster than justified by the uncertain economic outlook. Financial markets have been underpinned by promises from the Federal Reserve and other central banks to inject more money into economies through bond purchases and other steps.
Analysts, however, are skeptical about the U.S. stock market’s run since it began climbing after hitting a bottom in late March, down 34% from its record. Stocks have swung wildly in recent sessions following a weekslong rally.
Trading has been volatile in recent days as worsening virus trends in several hotspots around the world rattle investors.
“This market continues to be driven by emotion, and this week’s news has been optimistic, following last week’s trend that was cautious,” Mark Hackett, chief of investment research at Nationwide. “We will likely continue to see waves of volatility until the fundamental picture becomes clearer.”
Fed Chairman Jerome Powell will testify before Congress on monetary policy Wednesday. On Tuesday, Powell renewed the central bank’s vow to keep interest rates near zero until “the economy has weathered recent events,” noting significant uncertainty about the strength of the recovery from the coronavirus pandemic despite a recent "modest" rebound.
Investor sentiment got another boost Wednesday following a batch of stronger-than-expected housing data that signaled homebuyers are returning to the housing market. Mortgage applications to buy a home climbed 4% to an 11-year high as rates dropped to another record low, according to the Mortgage Bankers Association. Applications jumped 21% higher compared with the same period a year ago.
In energy markets, benchmark U.S. crude oil for July delivery lost 29 cents to $38.11 per barrel in electronic trading on the New York Mercantile Exchange. The contract gained $1.26 on Tuesday to settle at $38.38. Brent crude, the benchmark for international prices, shed 16 cents to $40,80 per barrel in London. It rose $1.24 the previous session to $40.96 a barrel.
In Europe, London's FTSE 100 rose 0.7% and Frankfurt’s DAX added 0.5%. The CAC 40 in France advanced 0.5%. In Asia, the Shanghai Composite Index edged 0.1% higher while the Hang Seng in Hong Kong added 0.6%.
Contributing: The Associated Press
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June 17, 2020 at 08:26PM
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Stocks drift higher on recovery hopes - USA TODAY
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