US stocks have jumped as investors were encouraged by PayPal’s outlook and an unexpected rise in Chinese exports, which raised hopes of an economic recovery.
The payments processor rose 11.8 per cent, providing the biggest boost to the S&P 500 after it forecast a strong recovery in payments volumes in the second quarter as social distancing drives more people to shop online.
Its shares helped the technology index rise 1.4 per cent while larger peer Visa Inc gained 2.7 per cent, the biggest support for the Dow Jones Industrials.
Energy stocks rose 2.6 per cent, the most among 11 major sectors on optimism around future oil demand after China’s overseas shipments in April rose for the first time this year as factories raced to make up for lost sales.
“With expectations just set so low, any positive news is really being welcomed, and the continuing negative news, to some extent, is being pushed to the side,” said Rick Meckler a partner at Cherry Lane Investments in New Vernon, New Jersey.
US stock indexes have rebounded sharply from a coronavirus-fuelled sell-off in March, powered by monetary and fiscal stimulus and, more recently, hard-hit states reopening businesses following sweeping lockdowns.
Wall Street’s fear gauge fell back near levels it was trading at in early March, before volatility leapt to 12-year highs due to the worldwide spread of COVID-19. However, the S&P 500 was still about 15 per cent below its February record high.
Latest data showed 3.17 million people in the US applied for state unemployment benefits last week, but the number marked the fifth straight weekly decrease in applications and raised hopes the worst of the outbreak’s impact on the labour market was over.
The Labor Department’s more comprehensive non-farm payroll report is due on Friday.
“We’re looking into the exit from lockdown, so now’s probably not the day that markets should be worrying too much about the economic data, they’re looking forward to the recovery,” said Edward Park, deputy chief investment officer at London-based firm Brooks Macdonald.
In early trading, the Dow Jones Industrial Average was up 283.17 points, or 1.20 per cent, at 23,947.81, the S&P 500 was up 34.99 points, or 1.23 per cent, at 2,883.41 and the Nasdaq Composite was up 98.48 points, or 1.11 per cent, at 8,952.87.
Lyft Inc surged 20.1 per cent as the ride-hailing company posted higher-than-expected revenue and vowed to further cut costs to become profitable. Rival Uber Technologies, which is expected to report results after markets close, gained 8.8 per cent.
Weapons maker Raytheon Technologies Corp jumped 0.9 per cent to lead gains among Dow components, as Chief Financial Officer Toby O’Brien said he expected positive free cash flow in 2020, primarily driven by its defence business.
About 350 of the S&P 500 companies have reported so far and first-quarter earnings are expected to have fallen 12.4 per cent, with analysts expecting an earnings recession by the second quarter, according to Refinitiv data.
Advancing issues outnumbered decliners more than 4-to-1 on the NYSE and 2-to-1 on the Nasdaq.
The S&P index recorded seven new 52-week highs and no new low, while the Nasdaq recorded 40 new highs and three new lows.