The S&P 500 on Tuesday closed in on its February record high, returning to levels last seen before the onset of the coronavirus crisis that caused one of Wall Street’s most dramatic crashes in history.
The benchmark index was about half a percent below its peak hit on Feb. 19, when investors started dumping shares in anticipation of what proved to be the biggest slump in the U.S. economy since the Great Depression.
Ultra-low interest rates, trillions of dollars in stimulus and, more recently, a better-than-feared second-quarter earnings season have allowed all three of Wall Street’s main indexes to recover.
The tech-heavy Nasdaq has led the charge, boosted by “stay-at-home winners” Amazon.com Inc, Netflix Inc and Apple Inc. The index was down about 0.4% in early trading.
The blue-chip Dow surged 1.2%, coming within 5% of its February peak.
“You’ve got to admit that this is a market that wants to go up, despite tensions between U.S.-China, despite news of the coronavirus not being particularly encouraging,” said Andrea Cicione, a strategist at TS Lombard.
“We’re facing an emergency from the health, economy and employment point of view — the outlook is a lot less rosy. There’s a disconnect between valuation and the actual outlook even though lower rates to some degree justify high valuation.”
Aiding sentiment, President Vladimir Putin claimed Russia had become the first country in the world to grant regulatory approval to a COVID-19 vaccine. But the approval’s speed has concerned some experts as the vaccine still must complete final trials.
Investors are now hoping Republicans and Democrats will resolve their differences and agree on another relief program to support about 30 million unemployed Americans, as the battle with the virus outbreak was far from over with U.S. cases surpassing 5 million last week.
Also in focus are Sino-U.S. tensions ahead of high-stakes trade talks in the coming weekend.
“Certainly the rhetoric from Washington has been negative with regards to China … there’s plenty of things to worry about, but markets are really focused more on the very easy fiscal and monetary policies at this point,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.
Financials, energy and industrial sectors, that have lagged the benchmark index this year, provided the biggest boost to the S&P 500 on Tuesday.
The S&P 500 was set to rise for the eighth straight session, its longest streak of gains since April 2019.
At 9:44 a.m. ET, the S&P 500 was up 15.39 points, or 0.46%, at 3,375.86, about 18 points shy of its high of 3,393.52. The Dow Jones Industrial Average was up 341.41 points, or 1.23%, at 28,132.85, and the Nasdaq Composite was down 48.37 points, or 0.44%, at 10,919.99.
Royal Caribbean Group jumped 4.6% after it hinted at new safety measures aimed at getting sailing going again after months of cancellations. Peers Norwegian Cruise Line Holdings Ltd and Carnival Corp also rose.
No. 1 U.S. mall owner Simon Property Group Inc gained 4.1% despite posting a disappointing second-quarter profit, as its chief executive officer expressed some hope over a recovery in retail as lockdown measures in some regions eased.
Advancing issues outnumbered decliners 3.44-to-1 on the NYSE and 1.44-to-1 on the Nasdaq.
The S&P index recorded 35 new 52-week highs and no new low, while the Nasdaq recorded 50 new highs and four new lows.
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