U.S stocks rose on Wednesday and the Nasdaq hit a record closing high, supported by technology shares as early signs of an economic rebound offset concern about further lockdowns due to a jump in coronavirus cases across the country. The TSX also ended higher, but once again trailed the gains being made south of the border.
Apple Inc and Microsoft Corp provided the biggest boosts to the Dow and S&P 500, with the S&P 500 technology index up 1.6% and leading sector gains. The Nasdaq outpaced the other two major indexes, ending 1.4% higher, led by Amazon.com, its fourth record closing high this month.
The number of confirmed U.S. coronavirus cases surpassed 3 million, affecting nearly one of every 100 Americans. California, Hawaii, Idaho, Missouri, Montana, Oklahoma and Texas broke their previous daily record highs for new infections.
Investors have been weighing a string of upbeat economic data including record job additions and a rebound in the service sector in June, against the surge in U.S. coronavirus cases recently, but the S&P 500 is still up more than 40% from its March closing low.
“The market continues to ignore the potential consequences of these spikes in new coronavirus cases,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“It’s overbought,” he said. “While I don’t expect this market to crash... I think investors at this juncture are playing with fire,” he said, noting the rise in safe-haven gold prices.
Adding to the optimistic tone late in the session, St. Louis Federal Reserve Bank President James Bullard told CNBC in an interview that U.S. unemployment will likely decline to below 8% “maybe even 7%” by the end of the year.
The Dow Jones Industrial Average rose 177.1 points, or 0.68%, to 26,067.28, the S&P 500 gained 24.62 points, or 0.78%, to 3,169.94 and the Nasdaq Composite added 148.61 points, or 1.44%, to 10,492.50.
Markets also appeared to be in a wait-and-watch mode before the beginning of the second-quarter earnings season, which kicks off next week with reports from the big Wall Street banks.
Quarterly earnings for S&P 500 companies are expected to decline nearly 44% year-on-year, the steepest drop since the 2008 financial crisis, according to IBES data from Refinitiv.
The S&P/TSX Composite Index rose 33.69 points, or 0.22%, at 15,629.19. Gains were held back by a 2.07% drop in the energy sector, which came despite oil prices settling higher as U.S. gasoline consumption showed signs of a recovery. Crude price gains were limited by rising crude inventories and an increase in coronavirus infections. Brent crude futures settled up 21 cents at US$43.29 a barrel. U.S. West Texas Intermediate (WTI) crude futures rose 28 cents to settle at $40.90 barrel.
Materials - a sector heavily comprised of gold stocks - rose 2.06% on the TSX.
Gold soared past the technical $1,800 threshold, scaling its highest since September 2011, as investors bolted for safety from the novel coronavirus and central banks poured in powerful stimulus to cushion its economic fallout.
Spot gold rallied 0.9% to $1,811.01 per ounce by 1:39 p.m. EDT. U.S. gold futures settled 0.6% higher at $1,820.60.
“The pillars of support are the fiscal and monetary stimulus,” along with inflows into gold-backed exchange traded funds and other investments, said David Meger, director of metals trading at High Ridge Futures.
“The constant injection of liquidity into the market continues to be the most prominent positive factor, as the dollar has been weakening and supporting commodity prices, but more specifically gold and silver.”
Prices earlier in the session vaulted to $1,817.71, the highest level since Sept. 19, 2011, and were holding below the all-time peak of $1,920.30 hit the same month.
The yellow metal has charted solid gains this year as the global economy grapples with the impact of the pandemic, which has infected more than 11.89 million people worldwide.
Travel curbs to prevent the spread of virus have also thwarted grey-market operators in the world’s second largest gold consumer, India.
“The growth in investment demand has more than offset the weakness in the physical markets and physically backed ETPs continue to scale fresh record highs,” said Standard Chartered analyst Suki Cooper.
Gold-backed exchange traded funds added 734 tonnes to their holdings in the first half of 2020 - more than in any previous full year, the World Gold Council said on Tuesday.
Read more: Stocks that saw action Wednesday - and why
Reuters, Globe staff
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