Friday, stocks rose sharply at the start of the session on Wall Street, the market having recovered part of its losses a day after its biggest rout since mid-March.
The S&P 500 rose 2.2% daily after declining 5.9%. The benchmark is still headed for a weekly loss after three weeks of solid gains. Small business stocks and bond yields rose overall, indicating that pessimism about the prospects for economic recovery after the coronavirus pandemic is fading.
Technology companies accounted for much of the gain. Financial services, healthcare and industrial companies also helped to lift the market. Most of the S&P 500’s shares have risen. The companies that were among the biggest losers on Thursday were big winners at the start, including airlines and cruise lines.
The stock rebound is a market reversal, which has sold for three straight days in the form of an increase in COVID-19 cases in the United States and the Federal Reserve’s discouraging economic outlook has disappointed l investor optimism for a rapid economic recovery as states lift home orders and businesses reopen.
Optimism that the reopening of the economy would be relatively quick once restrictions put in place to stem the spread of the outbreak have eased has helped fuel the stock market’s boom since late March. However, it is unclear whether Thursday’s market liquidation reflected a fundamental revaluation of the economic outlook or a one-off dip, as traders took advantage of recent market gains.
“We will continue to see market volatility because there is a lot of uncertainty about what the reopening of the US economy looks like,” said Julie Fox, Northeast private wealth market manager at UBS Financial Services.
The Dow Jones Industrial Average rose 653 points, or 2.6%, to 25,797. The Nasdaq, which surpassed 10,000 points for the first time on Wednesday, was up 2.2%. The Russell 2000 Small Business Index increased the most, up 3.5% at the start. European markets also increased, but Asian markets generally retreated.
Bond yields generally increased, a sign that economic pessimism was ebbing. The 10-year Treasury yield returned to 0.71% from 0.70% on Thursday evening.
Many market observers have said that the return to the market since the end of March is exaggerated and does not reflect the dire state of an economy in its worst crisis in decades. The S&P 500 rose 44.5% between late March and Monday, wiping out most of its pandemic-related losses.
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Investors have balanced optimism about the reopening of the economy and the possibility that easing restrictions will lead to an increase in new coronavirus infections and deaths. Cases are climbing in almost half of the states, according to an analysis by the Associated Press, a worrisome trend that could intensify as people return to work and venture out over the summer.
Oil prices have risen. US benchmark crude oil for July delivery increased 1.4% to $ 36.82 per barrel. Brent crude oil for August delivery increased 1.9% to $ 39.28 per barrel.
The French CAC 40 in Paris increased by 1.5%, while the German DAX increased by 0.9%. The British FTSE 100 rose 1.4%, recovering from the early losses announced by the 20.4% contraction in the British economy in April, wiping out almost two decades of growth.