Wall Street surges, led by energy and materials

Wall Street surges, led by energy and materials

New York Stock Exchange opens during COVID-19
FILE PHOTO: Traders wearing masks work, on the first day of in person trading since the closure during the outbreak of the coronavirus disease (COVID-19) on the floor at the New York Stock Exchange (NYSE) in New York, U.S., May 26, 2020. REUTERS/Brendan McDermid/Files

NEW YORK: Wall Street surged on Tuesday (Jul 14), with the Dow Jones Industrial Average ending more than 2 per cent higher as investors bought energy and materials stocks and looked beyond a recent rise in coronavirus cases.

In extended trade, Moderna surged 18 per cent after the biotech company's experimental vaccine for COVID-19 showed it was safe and provoked immune responses in an ongoing early-stage study.

Extended trade in S&P 500 emini futures suggested investors expect Wall Street to rise on Wednesday, with the futures climbing 0.8per cent. Shares of airlines, cruise ship lines, hotel operators and concert promoters also jumped after the report by US researchers on the Moderna vaccine study.

In regular trade on Tuesday, the S&P 500 energy, materials and industrial indexes jumped more than 2 per cent, while health, technology and consumer staples each rose more than 1 per cent.

Amazon.com finished down 0.6 per cent. A recovery from deeper losses by Amazon and other technology and growth stocks that recently have performed strongly, including Facebook and Netflix, gave the Nasdaq a last-minute spurt.

"Today is counterintuitive. We are reading about California's economy shutting down and a record spike in cases in Florida, and yet you have energy stocks leading," said Bob Shea, chief executive officer at TrimTabs Asset Management in New York. "We're seeing a mini-rotation into value."

JPMorgan Chase & Co, the largest US lender, rose 0.6 per cent after it posted a smaller-than-expected 51 per cent drop in second-quarter profit.

Wells Fargo & Co tumbled 4.6 per cent after booking a quarterly loss for the first time since the 2008 financial crisis. Citigroup Inc dropped 3.9 per cent after it reported a steep fall in quarterly profit.

The S&P 500 banks index dropped 1.2 per cent as the three banks set aside a combined US$28 billion to cover potential losses on loans to borrowers hurt by the coronavirus pandemic.

Wall Street has reclaimed most of its coronavirus-driven losses since March as a raft of monetary and fiscal stimulus and upbeat economic data raised hopes of a swift post-pandemic recovery. But a recent record surge in COVID-19 cases and new business restrictions, particularly in California, have raised uncertainty anew about how long it may take for the economy to recover.

Alabama, Florida and North Carolina reported record daily increases in COVID-19 deaths on Tuesday.

Following a drop of more than 2 per cent in the Nasdaq on Monday, some investors had worried that Wall Street's recent rally might be ending. With Tuesday's quick rebound, the Nasdaq has gone two months without suffering two days in a row of declines.

Investors are bracing for what could be the sharpest drop in quarterly earnings for S&P 500 companies since the 2008 financial crisis, according to Refinitiv IBES data.

The Dow Jones Industrial Average surged 2.13 per cent to end at 26,642.59 points, while the S&P 500 gained 1.34 per cent to 3,197.52. The Nasdaq Composite added 0.94 per cent to 10,488.58.

Delta Air Lines Inc ended down 2.65 per cent after it warned it will be more than two years before the industry sees a sustainable recovery from the "staggering" impact of the coronavirus pandemic, with demand largely tracking the curve of infections in different places.

Advancing issues outnumbered declining ones on the NYSE by a 1.92-to-1 ratio; on Nasdaq, a 1.63-to-1 ratio favored advancers.

The S&P 500 posted seven new 52-week highs and no new lows; the Nasdaq Composite recorded 35 new highs and 31 new lows.

Volume on US exchanges was 10.7 billion shares, compared with the 11.8 billion average for the full session over the last 20 trading days.

Source: Reuters/jt