U.S. stocks staged a dramatic comeback late Monday to end higher, as U.S. crude oil settled above $20 a barrel and tensions simmered between China and the U.S. over Beijing’s handling of the coronavirus outbreak.
How did benchmarks perform?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.44% managed a gain of 26.07 points, or 0.1%, to end at 23,749.76, well off its session low at 23,361.16, as a rally in Microsoft Corp . /zigman2/quotes/207732364/composite MSFT -0.30% and Apple /zigman2/quotes/202934861/composite AAPL +0.25% helped to more than offset declines in Caterpillar /zigman2/quotes/203434128/composite CAT +1.81% and Walt Disney & Co . /zigman2/quotes/203410047/composite DIS +2.17%
Meanwhile, the S&P 500 /zigman2/quotes/210599714/realtime SPX +1.05% gained 12.03 points, or 0.4%, finishing at 2,842.74, aided by gains in the energy sector /zigman2/quotes/210600521/delayed XX:SP500.10 +3.25% , rising 3.7%, and information technology /zigman2/quotes/210600213/delayed XX:SP500.45 -0.03% , up 1.4%. The Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +0.66% rose 105.77 points, or 1.2%, closing at 8,710.7, powered by gains in Tesla /zigman2/quotes/203558040/composite TSLA +10.78% and Amazon /zigman2/quotes/210331248/composite AMZN +0.55% .
At session lows, the S&P 500 was down 1.2% and the Dow was 1.5% lower at Monday’s nadir, marking their best intraday turnarounds since March 25 and March 19, respectively, according to Dow Jones Market data.
What drove the market?
Stocks flipped into positive territory late in the session Monday, after U.S. crude settled above $20 a barrel and the U.S. continued to place blame on China for its handling of the pandemic.
“We think this is more about U.S. politics than about China, but the developments are still important,” wrote Lauren Goodwin, economist and multiasset portfolio strategist at New York Life Investments, in Monday commentary, adding that volatility in stocks and credit spreads, are “demonstrating just how fragile valuations can be amid so much uncertainty about the fundamentals.”
President Donald Trump suggested he could punish Beijing by imposing additional tariffs on China last week. On Sunday, U.S. Secretary of State Mike Pompeo, in an interview on ABC’s “This Week , ”said he has seen “enormous evidence” that the virus originated in a laboratory in Wuhan, China. Trump during a Sunday night Fox appearance said: “I think they made a horrible mistake and they didn’t want to admit it.”
At the same time, last week’s losses on major benchmarks were reversed Monday, suggesting investors were taking the increased geopolitical risk in stride.
“Investors have gotten accustomed to the way the Trump administration floats trial balloons. I don’t anticipate governments will make the same mistake of imposing higher tariffs,” Scott Clemons, chief investment strategist at Brown Brothers Harriman, told MarketWatch.
Investors also were considering remarks made by Warren Buffett on Saturday, during Berkshire Hathaway ’s /zigman2/quotes/200060694/composite BRK.B +2.29% /zigman2/quotes/208872451/composite BRK.A +1.90% annual shareholder meeting, which was held via webcast. The venerated, 89-year-old investor underscored how much uncertainty the virus has created in financial markets, including for airlines.
Buffett said Berkshire dumped its entire stake in airline-sector stocks, while the insurance and investing conglomerate also built up a record cash pile of $137.2 billion during the height of the coronavirus-induced rout in markets.
Meanwhile, a release of purchasing managers indexes Monday for several Western European countries showed that coronavirus lockdowns sent manufacturing activity to all-time lows in Germany, France, Spain and Italy in April.
As for the U.S., an attempt to restart the economies of dozens of states hasn’t come without problems, amid warmer weather that has lured larger gatherings of people out onto the streets in the midst of the worst viral outbreak in more than a century.