U.S. stocks rose on Wednesday, holding their morning gains through to the close as investors appeared to move past a disappointing report over a potential coronavirus vaccine that dogged Wall Street a day earlier.
The Dow Jones Industrial Average closed up 370 points, or 1.5%. The Nasdaq Composite gained 2.1% and the small-cap Russell 2000 index jumped 2.8%. The S&P 500 closed up 1.7%, at its highest levels since early March.
The rebound off the lows over the past two months has been broad, with about 80% of S&P 500 components trading above their 50-day moving average. That’s the highest percentage since July 2019.
The Dow fell nearly 400 points late in Tuesday’s session after vaccine experts shared some of their skepticisms about the interim phase-one results of Moderna’s (ticker: MRNA) vaccine candidate. Global equity gains this week have been driven by optimism over that vaccine, helping investors to look past risks to the economy and rising trade tensions.
The reaction to Moderna’s announcement followed a pattern in recent weeks, where investors show a willingness to move entire markets on even preliminary drug data. That is amid a still fast-moving flow of news about the outbreak.
“This is likely to be a persistent problem in the days and weeks ahead, as sentiment ebbs and flows, according to the fortunes of clinical trials and tests, as economies struggle back to their feet, as lockdown measures are gradually eased,” said Michael Hewson, chief market analyst at CMC Markets, in a note to clients.
Reopenings are taking hold around the world, but the virus is also showing a resurgence in China and elsewhere. Governments are on their toes, trying to stamp out infections.
Investors also parsed the minutes from the most recent Federal Reserve meeting in April, which were released on Wednesday afternoon. Fed officials discussed the dire state of the U.S. economy.
Asian stock indexes were mixed on Wednesday, as European shares rose alongside New York markets. Japan’s Nikkei 225 rose 0.8%, China’s Shanghai Composite index closed down 0.5%, and Hong Kong’s Hang Seng ended flat, up less than 0.05%.
The Stoxx Europe 600 index closed up 1%, France’s CAC 40 ticked up 0.9%, the German DAX climbed 1.3%, and the U.K.’s FTSE 100 Index added 1.1%.
Haven assets also closed mixed. The price of gold ended up 0.3%, at$1,751.20 an ounce. The yield on the 10-year U.S. Treasury note fell 3 basis points, or hundredth of a percentage point, to 0.679%, as the price of the securities rose. And the U.S. Dollar Index (DXY)—which measures the greenback against a basket of other currencies—ticked down 0.2%.
Oil prices—another big story in May—settled up 4.8% at $33.49 a barrel. Benchmark U.S. crude prices have risen 70% month to date, but remain deeply depressed for the year. Oil prices dropped in each of the first four months of 2020, falling from more than $60 a barrel to less than $20.
Oil stocks also moved higher on Wednesday. Occidental Petroleum (OXY) shares, for instance, gained 4.3%. They’re still down about 13% month to date, despite oil’s rise. That pattern is mimicked in the stocks of several other oil producers, such as Exxon Mobil (XOM).
Earnings moved other stocks.
Target (TGT) reported 59 cents in per share earnings Wednesday. The number is down from $1.53 earned during the first quarter of 2019, but Wall Street was only looking for about 44 cents a share. Sales rose year over year, but costs rose faster. That is a similar pattern to what other retailers operating in a Covid-19 world have reported.
Target shares lost 2.9% on Wednesday. Year to date, the stock is off about 4%, having held up a little better than the overall market.
Lowe’s (LOW) bucked the trend of higher sales offset by higher costs. The company reported $1.77 a share from $19.7 billion in sales Wednesday morning. Earnings not only rose year over year, they blew past Wall Street’s estimates. Analysts had predicted $1.32 in per share earnings. Shares rose less than 0.1%, however.
Finally, American depositary receipts of Luckin Coffee (LK) tumbled 36%. The Chinese coffee chain is embroiled in an accounting scandal and the Nasdaq is planning to delist shares from its exchange. Coming into Wednesday, shares were already down almost 90% year to date.