U.S. Stocks Show Significant Move Back To The Upside

Stocks moved sharply higher over the course of the trading session on Monday, largely offsetting the pullback seen last Friday. With the upward move on the day, the major averages added to the substantial gains posted last week.

The major averages saw further upside going into the close, ending the day just off their highs of the session. The Dow surged up 690.70 points or 3.2 percent to 22,327.48, the Nasdaq soared 271.77 points or 3.6 percent to 7,774.15 and the S&P 500 jumped 85.18 points or 3.4 percent to 2,626.65.

The strength on Wall Street came after President Donald Trump extended national social distancing guidelines until at least April 30th.

Trump had previously hoped to reopen the country by Easter Sunday, on April 12th, but said he decided to extend the guidelines in an effort to keep the death toll from the coronavirus below 100,000.

The announcement by Trump comes as data from Johns Hopkins University shows more than 153,000 confirmed coronavirus cases in the U.S. and more than 2,800 deaths.

Trump said during a press conference on Sunday that he expects the U.S. to be “well on our way to recovery” by June 1st.

The extension of the social distancing guidelines means continued pressure on the economy, although traders seemed to breathe a sigh of relief that Trump decided against lifting the guidelines prematurely.

Some public health experts warned that reopening the country too early risked making the coronavirus outbreak even worse.

News on the coronavirus front is likely to remain in focus throughout the week, although the Labor Department’s monthly jobs report on Friday is still likely to attract attention.

Economists currently expect the report to show a loss of about 148,000 jobs in March, with the unemployment rate jumping to 3.9 percent from 3.5 percent.

The National Association of Realtors released a report this morning showing an unexpected jump in pending home sales in the month of February, pointing to a healthy housing market before the coronavirus-induced shutdown,

NAR said its pending home sales index surged up by 2.4 percent to 111.5 in February after spiking by 5.3 percent to an upwardly revised 108.9 in January. The continued increase surprised economists, who had expected pending home sales to pull back by 1.0 percent.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

However, NAR chief economist Lawrence Yun noted the latest data does not capture the significant fallout from the coronavirus pandemic or the measures taken to control the outbreak.

Sector News

Software stocks showed a substantial move to the upside on the day, with the Dow Jones U.S. Software Index spiking by 5.3 percent.

Considerable strength was also visible among pharmaceutical stocks, as reflected by the 5.3 percent jump by the NYSE Arca Pharmaceutical Index.

Abbott (ABT) posted a standout gain after the FDA issued Emergency Use Authorization for the healthcare company’s coronavirus test, which Abbott said is the fastest available molecular point-of-care test for the detection of COVID-19.

Chemical stocks also turned in a particularly strong performance, driving the S&P Chemical Sector Index up by 3.7 percent.

Tobacco, biotechnology, semiconductor and utilities stocks also saw significant strength on the day, while oil service and gold stocks bucked the uptrend.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan’s Nikkei 225 Index slumped by 1.6 percent, while China’s Shanghai Composite Index slid by 0.9 percent.

Meanwhile, the major European markets moved higher over the course of the session. While the German DAX Index surged up by 1.9 percent, the U.K.’s FTSE 100 Index advanced by 1 percent and the French CAC 40 Index rose by 0.6 percent.

In the bond market, treasuries extended the upward move seen over the two previous sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 7.9 basis points to 0.670 percent.

Looking Ahead

Trading activity on Tuesday could be impacted by reports on consumer confidence and Chicago-area business activity in the month of March, although the data may be overshadowed by news on the coronavirus front.

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