Wall Street’s main indexes have surged and the Nasdaq has hit a three-month high as investors clung to hopes of a recovery from a coronavirus-fuelled slump amid signs of more stimulus for ailing sectors.
The tech-heavy index, now about 5.0 per cent below its all-time high hit in February, boosted by Facebook Inc and Amazon.com Inc, which were trading at record levels, as well as Apple Inc.
The S&P 500 was about 12 per cent below its all-time peak and the Dow Jones index was short by 17 per cent.
The three indexes have rallied more than 30 per cent from March lows on unprecedented stimulus but gains have been capped this month as traders digest mixed headlines on progress in developing a coronavirus vaccine.
The S&P 500 tumbled 1.0 per cent in the final hour of Tuesday’s session after a report raised doubts about positive results from Moderna Inc’s early-stage trial for a COVID-19 vaccine.
“We don’t expect very big gains from here, but we don’t expect a downward trend either,” said Simona Gambarini, markets economist at Capital Economics in London.
“As the lockdowns are eased and the coronavirus epidemic is brought under control in more and more countries, some recovery in the economy is already factored into the equity prices.”
US Treasury Secretary Steven Mnuchin and Federal Reserve Chair Jerome Powell said on Tuesday the government and the central bank were considering more steps to ensure the worst-hit areas of the economy received adequate support.
All eyes are now on the minutes from the Fed’s latest policy meeting expected at 2pm ET.
In early trading, the Dow Jones Industrial Average was up 347.25 points, or 1.43 per cent, at 24,554.11, the S&P 500 was up 47.12 points, or 1.61 per cent, at 2,970.06. The Nasdaq Composite was up 168.87 points, or 1.84 per cent, at 9,353.97.
Gains were broad-based with the cyclical sectors including industrials, energy and materials posting their biggest percentage gains on hopes of a pick-up in demand.
Home improvement chain Lowe’s Cos Inc rose 1.8 per cent after posting higher quarterly same-store sales.
Analog Devices Inc gained 7.3 per cent after the chipmaker forecast third-quarter profit ahead of expectations.
Target Corp slipped 0.7 per cent after the big box retailer reported a 64 per cent plunge in quarterly profit, pummelled by costs to tackle the coronavirus outbreak.
S&P 1500 airlines index gained about 4.5 per cent as Delta Air Lines Inc chief executive officer said he was confident travel will return in the next 12 to 18 months.
Advancing issues outnumbered decliners by a 7.11-to-1 ratio on the NYSE and by a 4.45-to-1 ratio on the Nasdaq.
The S&P index recorded 11 new 52-week highs and no new lows, while the Nasdaq recorded 49 new highs and six new lows.