US stocks rise on hopes of coronavirus outbreak peaking
Energy stocks lead gains among major S&P 500 sectors
Bengaluru — Wall Street rose on Wednesday on hopes the coronavirus outbreak in the US was close to its peak, with health insurers boosted by Democratic presidential candidate Bernie Sanders suspending his campaign.
UnitedHealth Group, Anthem and Cigna jumped between 4% and 7%, and the health care index provided one of the biggest boosts among the 11 major S&P 500 sectors.
Sanders' embrace of a Medicare for all health care policy would have essentially abolished private insurance and had cast a shadow on health care stocks for months.
The news added to early gains after President Donald Trump said the US might be getting to the top of the “curve” in relation to the outbreak, even as New York and several other states posted their highest number of daily virus-related fatalities.
“The stock markets are forward looking, so there's anticipation that, hopefully sooner rather than later, the death count will be less than anticipated,” said Marc Pfeffer, chief investment officer at CLS Investments.
“I'd like to say that the bottom has been put in, but we can't say for sure. The conversations are now starting to move towards the reopening of the economy.”
The benchmark S&P 500 is down nearly 20% from its record high in mid-February, despite big gains early this week, as measures to contain the virus brought the US economy to a virtual halt.
Tesla and Boeing supplier Spirit AeroSystems became the latest companies to furlough workers.
Top US Democrats in Congress said on Wednesday they would back the Trump administration's request for $250bn more in aid for small businesses if it includes additional money for hospitals, local governments and food assistance.
Early gains were led by the energy index, which rose over 3%, as oil stocks tracked crude prices higher and risk appetite was boosted by the prospect of more fiscal stimulus.
By midday on Wednesday the Dow Jones Industrial Average was up 2.44% at 23,206.60, the S&P 500 had gained 2.27% at 2,719.73 and the Nasdaq Composite was up 1.87% at 8,034.80.
Corporate earnings season starts next week. The major Wall Street banks and companies are expected to outline more drastic measures to bolster dwindling cash reserves.
“Investors are bracing themselves for a terrible earnings season and are going to try to look for clues on what businesses will see more normalised operations,” said Yung-Yu Ma, chief strategy officer at BMO Wealth Management.