Stocks rose on Monday as investors mulled the possibility of reopening the economy after the coronavirus outbreak.
The Dow Jones Industrial Average traded 363 points higher, or 1.5%. The S&P 500 gained 1.5% while the Nasdaq Composite advanced 1.2%. (Click here for the latest market news.)
JPMorgan Chase and Disney were the best-performing Dow stocks, rising more than 4% each. The financials sector led the S&P 500 higher, climbing more than 3%. Citigroup shares rallied more than 6% while Wells Fargo and Bank of America were each up over 4%.
“Additional global stimulus measures, slowing COVID-19 cases, and signals of normalcy returning are no doubt good news in the current environment. That said, the economy is a far cry from even walking shape right now — it’s slowly crawling back to life,” said Mike Loewengart, vice president of investment strategy at E-Trade.
States including Alaska, Georgia, South Carolina, Tennessee and Texas are beginning to allow restaurants and other establishments to serve customers. Ohio Gov. Mike DeWine said consumer retail and services can start reopening on May 12.
New York Gov. Andrew Cuomo said Sunday the state plans to reopen its economy in phases. The first phase, Cuomo said, would involve New York’s construction and manufacturing sectors. As part of the second phase, businesses will need to design plans for a reopening that include social distancing practices and having personal protective equipment available. Cuomo also noted that coronavirus-related hospitalizations have fallen for 14 days and that virus deaths in New York hit a near one-month low.
“As various states begin to reopen their economies and relax social distancing rules, we will get a glimpse of what the new normal looks like,” said Marc Chaikin, CEO of Chaikin Analytics. “The biggest risk to the stock market is a premature reopening of the U.S. economy which results in an increase in COVID-19 cases and requires an abrupt reversal of these efforts to awaken the economy out of its engineered coma.”
Stocks that would benefit most from an economic reopening led the way higher on Monday. MGM Resorts and Carnival both climbed more than 8%. Gap and Kohl’s gained 9.9% and 12.7%, respectively.
Wall Street’s coming off its first weekly decline in three as a record plunge in crude prices last Monday and Tuesday sent investors on a wild ride. Both the Dow and S&P 500 fell over 1% last week while the Nasdaq Composite dipped 0.2%.
Still, coronavirus shelter-in-place orders and social distancing guidelines remain Wall Street’s No. 1 concern as the rules keep thousands of businesses closed. Officials have confirmed nearly 3 million Covid-19 cases worldwide with over 900,000 in the U.S., according to data from Johns Hopkins.
The outbreak, and subsequent business closures, sparked a wave of job losses. Data from the Labor Department show that more than 26 million people have filed for unemployment benefits over the past five weeks.
To be sure, a decline in new virus infections and unprecedented monetary and fiscal stimulus have sparked a massive stock-market rally from the lows reached on March 23. Since then, the major averages are all up more than 20%, with the S&P 500 retracing about half of its decline from a record set Feb. 19.
Investors have also cheered the prospects of Gilead Sciences’ remdesivir as a potential treatment for the coronavirus. On April 16, STAT News reported patients at a Chicago hospital with severe coronavirus symptoms were quickly recovering after being treated with the drug in a trial.
A Financial Times report on Wednesday quelled some of that excitement, however, as it stated remdesivir did not improve patients’ conditions during a trial in China. Gilead pushed back on the report and the study it cited, noting the trial was “was terminated early due to low enrollment,” making it “underpowered to enable statistically meaningful conclusions.”
“This drug has become the single most important macro topic/theme/trend in the entire market,” Adam Crisafulli, founder of Vital Knowledge, said in a note. “Investors are dismissing the ‘flop’ headline from the FT and continue to anticipate positive results of some kind out of (at least) one of the many Remdesivir trials now underway (while FDA approval is widely assumed).”
“The present setup is such that Remdesivir anticipation will very likely be more beneficial/powerful than the actual results themselves (the data most likely will show efficacy to some extent in certain instances, but a medical “silver bullet” isn’t about to emerge),” Crisafulli added.
—CNBC’s Michael Bloom contributed to this report.
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