Protesters in New York on Tuesday night.
Getty ImagesU.S. stocks were rising on Wednesday as investors welcomed data indicating that far fewer Americans lost their jobs in May than expected, better economic news from China, and a less violent night of protests in the U.S.
The Dow Jones Industrial Average was up 393 points, or 1.5%, adding to two consecutive days of gains. The S&P 500 was 1.1% higher and the Nasdaq Composite gained 0.5%. The economically sensitive small-cap Russell 2000 index jumped 2.9%.
The Europe Stoxx 600 index rose 2.5% and the FTSE 100 rose 2.6%, trading around levels not seen in three months. Germany’s DAX Index is 3.9% higher as hope mounts that the European Union will reach agreement on an economic-stimulus plan.
The South Korean KOSPI climbed nearly 3%, leading Asia higher, after the government announced another stimulus package—worth $28.9 billion—as the economy has struggled even amid a milder Covid-19 outbreak.
In China, a private gauge of service sector activity rebounded to a nearly 10-year high in May. The eurozone services purchasing managers index rose to a three-month high in May, though it remains deep in contraction territory.
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In positive U.S. news, figures from Automatic Data Processing showed 2.76 million jobs were lost in May, a figure vastly lower than the 8.75 million expected. The numbers are seen as a preview of government data to be released on Friday.
Still, some analysts worry that investors could be getting ahead of themselves in thinking stock rallies are unstoppable.
“While markets are being fueled on a bonanza of cheap money, there is a growing worry that investors are mispricing the economic scarring that is likely to be left once the full effects of the current crisis have started to become more apparent,” added Hewson.
Investors have also largely brushed aside widespread U.S. protests, which have turned violent in some places, at times involving looting. Those have followed anger after following the May 25 death of George Floyd and other recent racially charged killings.
The dollar, meanwhile, is down more than 5% from March highs and down about 2.5% over the past few weeks. Those are small numbers, relative to stock-market moves, but they are big for currencies. The recent drop is a sign that currency traders think things are returning to normal as global economies slowly awaken from the Covid-19 slumber.
Recent moves in discretionary retail stocks are another sign investors are looking ahead to better days. Discretionary goods—such as makeup and clothing—have been hit hard by the Covid-19 pandemic and stay-at-home orders.
Macy’s (ticker: M) stock, for instance, rose 8.7% Wednesday, on top of a 9.3% gain on Tuesday, despite damage done to its New York flagship store by looting that has accompanied the nationwide protests against violence by police against people of color.
Another discretionary goods company, Coty (COTY), continues its volatile ride this week. The company announced a transaction with private-equity players KKR (KKR) Monday, bringing in cash and paying down debt. As a result, Coty stock jumped 21% Monday. It gave back some of those gains Tuesday, falling 4.6%. But shares are up again Wednesday, rising 7%.
The reason for today’s jump isn’t related to the KKR deal. Reports say the company is in talks with Kim Kardashian-West on a beauty products line.
Macy’s and Coty stocks both remained down about 60% year to date as of Tuesday’s closing prices.
Campbell Soup (CPB) reported better than expected earnings Wednesday morning. Comparable sales jumped 17% year over year and the company earned 83 cents a share. Analysts were looking for about 75 cents in per-share earnings. Campbell stock fell 5.8% on Wednesday as some of the good news may have already been reflected in the stock price.
Write to Barbara Kollmeyer at bkollmeyer@marketwatch.com
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Stocks Rally Again After a Calmer Night of U.S. Protests - Barron's
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