U.S. and Canadian indexes rallied broadly on Wednesday, with the Nasdaq approaching record highs as signs of an economic recovery from mandated shutdowns helped investors look beyond U.S. social unrest and pandemic worries.
Financials, industrials and tech pushed the three major U.S. stock indexes well into the black. The S&P 500 and the Nasdaq each posted their fourth straight day of solid gains.
In Canada, the TSX climbed to a three-month high in a broad-based rally, with only the materials sector left behind as gold prices continued to trend lower, at one point slipping below US$1,700 an ounce.
Stocks have rebounded sharply from their troughs hit in late March, when coronavirus-related lockdowns shocked the stock market.
“There is growing confidence the U.S. economy can safely re-open, much as other economies such as China and Italy have successfully done,” said David Carter, chief investment officer at Lenox Wealth Advisors in New York. “Risk appetite for equities has been helped by optimism in the economy, as well as investors having few other alternatives.”
Nationwide protests over the death of an unarmed black man in police custody extended through their eighth night as protesters ignored curfews, but violence subsided after President Donald Trump threatened to deploy the military.
A spate of grim economic data was not as bad as economists feared, with ADP reporting many fewer private-sector job cuts in May than expected.
“It never feels quite right to pop the champagne over economic data that is ‘less bad,’” Carter added. “But it does support the idea that momentum is shifting in a more positive direction sooner than expected.”
Market participants now await the U.S. Labor Department’s more comprehensive May jobs report, which is expected to show unemployment soaring to a historic 19.7%. Statistics Canada will also report on the May jobs picture on Friday for this side of the border; some half a million jobs are expected to have been lost, less steep than April’s loss of nearly two million, with the unemployment likely to soar above the record 13.1% set in 1982.
Unofficially, the Dow Jones Industrial Average rose 2.06% to end at 26,272.27 points, while the S&P 500 gained 1.36% to 3,122.81.
The Nasdaq Composite climbed 0.76% to 9,681.11.
Boeing Co gave the biggest boost to the blue-chip Dow following news that billionaire investor Daniel Loeb’s Third Point had taken a stake in the company.
The S&P/TSX Composite index rose 222.23 points, or 1.44%, to 15,616.59. The real estate index rose 4%, and financials 3.33%. Indeed, it was good day for REITs, with RioCan gaining 5.87%.
Oil ended slightly higher but remained below the session’s early highs above US$40 a barrel, the highest since March, retreating as doubts emerged about the timing and scale of a potential extension to the pact between OPEC and its allies to cut crude supplies.
Oil prices were supported by a drawdown in U.S. crude inventories in the latest week, but came under pressure as U.S. refined product inventories surged on tepid demand.
Saudi Arabia and Russia have a deal to extend oil output cuts by a month, but a policy meeting on Thursday rather than later in June is unlikely, sources told Reuters. Early in the session, oil fell when Bloomberg reported the Thursday meeting was in doubt.
“Prices were firm so far this week on the news that the meeting was earlier,” said Olivier Jakob, oil analyst at Petromatrix. “The retracement today is definitely due to the latest headlines on OPEC.”
Brent crude futures for August settled up 22 cents, or 0.6%, at $39.79 a barrel. The session high of $40.53 was the highest since March 6. West Texas Intermediate (WTI) crude for July rose 48 cents, to $37.29 a barrel.
Read more: Stocks that saw action Wednesday - and why
Reuters, Globe staff
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