Market Snapshot: Dow rallies more than 400 points as stock market extends rebound from coronavirus selloff

Market Snapshot: Dow rallies more than 400 points as stock market extends rebound from coronavirus selloff

4 Feb    Finance News

U.S. stocks traded sharply higher Tuesday as investors weighed stimulus efforts by the People’s Bank of China, as it tries to combat the economic impact of a deadly Asian virus that has claimed hundreds of lives and infected more than 20,000 people.

How are stock benchmarks faring?

The Dow Jones Industrial Average DJIA, +1.61%  rose 447 points, or 1.6%, to 28,847, the S&P 500 index SPX, +1.65% gained 51 points, or 1.6%, to trade at 3,300. The Nasdaq Composite Index COMP, +2.07% advanced 179 points, or 1.9%, to reach 9,452.

All three major benchmarks have taken back the ground lost during Friday’s coronavirus-related rout.

What’s driving the market?

The coronavirus has infected more than 20,000 people in China and claimed 465 lives, according to China’s National Health Commission. The People’s Bank of China offered funds in the overnight market to the tune of 500 billion yuan ($71 billion) on Tuesday to ease the economic stress of containing the viral outbreak, according to The Wall Street Journal. This follows an initial injection of 1.2 trillion yuan into the Chinese banking system on Monday.

Markets have been fairly upbeat on the back of some of the efforts to limit the spread and the PBOC’s attempts to stanch the economic pain for China.

“As we’ve seen with many volatility shocks, as soon as the market stabilizes for whatever reason, such as central bankers taking measures to stabilize the economy, it then gives investors confidence to go into risk assets again,” Clifton Hill, global macro portfolio manager for Acadian Asset Management, told MarketWatch.

See also  UK Latest: Cold Weather, Power Demand, October GDP Data

Politics were also drawing outsize attention in early Tuesday trade as investors awaited a State of the Union address at 9 p.m. Eastern Time.

Read: Trump’s State of the Union speech could dent health care stocks, but boost broader market, analysts say

Also see: How the stock market has reacted to State of the Union speeches

Wall Street investors focused on the Democratic race for the 2020 presidential nomination, after technology problems and reporting inconsistencies kept Iowa Democratic Party officials from releasing results from Monday’s caucus, the first contest in a six-month process.

Sen. Bernie Sanders, the Vermont independent, released figures showing he was in front, while the former mayor of South Bend, Ind., Pete Buttigieg, claimed victory, saying that “by all indications, we are going on to New Hampshire victorious.” New Hampshire will be the location of the second primary contest for Democrats on Feb. 11.

“A victory for Sanders or Sen. Elizabeth Warren could be a headwind for markets, stoking concern among investors of the potential for higher taxes, antitrust probes, and restrictions on drug prices,” wrote Mark Haefele, global chief investment officer, in a Tuesday note.

Trump, meanwhile, is expected to be cleared by the Senate on Wednesday in his impeachment trial.

Looking ahead, the data calendar is light with reports on vehicle sales expected throughout the day. The Commerce Department said factory orders rose 1.8% in December, beating expectations for a 1.5% rise among economists surveyed by MarketWatch.

Which stocks are in focus?
See also  Cambodia inaugurates new Chinese-funded airport serving popular tourist destination of Angkor Wat
How are other markets trading?

Government bond yields were surging, with the yield on the 10-year U.S. Treasury note TMUBMUSD10Y, +4.58%  up about 8.4 basis points to 1.60%.

Oil prices were on the rise, with the price of a barrel of West Texas Intermediate crude for March delivery CLH20, -0.54%  rising 0.3% to $50.25. In precious metals, the price of an ounce of gold for April delivery GCJ20, -1.67%  declined 1.7% to about $1,555.

The U.S. dollar DXY, +0.17%  rose 0.2% relative to a basket of six major peers.

In Europe, the Stoxx Europe 600 SXXP, +1.64%  recorded a gain of 1.6%.

In Asia overnight, stocks rose significantly. The China CSI 300 000300, +2.64%  added 2.6%, Japan’s Nikkei 225 NIK, +0.49% added 0.5% and Hong Kong’s Hang Seng HSI, +1.21%  advanced 1.2%.

Leave a Reply

Your email address will not be published. Required fields are marked *