U.S. stocks finished higher Wednesday, adding to several sessions of gains as economic data pointed to less severe damage from the COVID-19 pandemic than feared, leaving major equity benchmarks at their loftiest levels since early March.
How did benchmarks perform?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.17% advanced 527.24 points, or 2.1%, to close at 26,269.89, while the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.06% rose 42.05 points, or 1.4%, to end at 3,112.87, the highest finish for both benchmarks since March 4, according to Dow Jones Market Data. The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP -0.87% rose 74.54 points, or 0.8%, ending at 9,682.91, or 1.4% away from its all-time closing high of 9,817.18 in February.
On Tuesday, the Dow rose 267.63 points, or 1.1%, to end at 25,742.65, marking its highest close since March 6, according to Dow Jones Market Data. Meanwhile, the S&P 500 index rose 25.09 points, or 0.8%, closing at 3,080.82, its loftiest finish since March 4, and the Nasdaq advanced 56.33 points, or 0.6%, to finish at 9,608.37, representing its best closing level since Feb. 20.
What drove the market?
Markets have climbed a virtual wall of worry to head higher over the past several sessions, shrugging off social strife and demonstrations in major cities, testiness between the U.S. and China and the economic carnage wrought by a viral pandemic.
Stocks rose Wednesday after data from Automatic Data Processing showed private-sector employers shed 2.76 million jobs in May, following a decrease of 20.2 million in April. Last month’s fall was much less than the 8.66 million job losses expected from economists polled by Econoday.
“We’ve been pretty amazed at how far we’ve come, and how quickly we’ve come,” said Matt Parker, a portfolio manager at Intrepid Capital Management in Jacksonville Beach, Fla. “We can see both the bull and bear cases from here,” he said in an interview with MarketWatch, pointing to skyrocketing unemployment, but also unprecedented fiscal and monetary stimulus as backstops.
Analysts also noted the more closely watched Labor Department employment report will be released Friday. The ADP data often are not a reliable guide to official data.
“We’ve seen a lot, but the economic data released in this recession have been the strangest in history,” said Chris Rupkey, chief financial economist for MUFG Securities, in a note.
In addition to labor-market data, the Institute for Supply Management said its main reading of the service sector’s health came in at 45.4 in May, above the consensus forecast of 44.7. Any reading below 50 represents a contraction in activity.
Markets have largely looked past a wave of protests across U.S. cities sparked by the death last week of George Floyd — a black man who died in Minneapolis police custody. Protests at times have turned violent, resulting in curfews imposed in a number of cities, including New York.
Amid the outrage, Minnesota’s attorney general said the murder charge will be toughened against the fired Minneapolis police officer in Floyd’s death, according to a Star Tribune report on Wednesday, which also stated that charges will be brought against three other former officers involved in the incident.
The current bout of unrest in America has drawn comparisons to riots in major U.S. cities in 1968 following Martin Luther King Jr.’s assassination, but BTIG analysts note that the weakened state of the economy, due to fallout from the viral outbreak, makes the present situation worse. “GDP growth in 1968 was 4.8%, 2020s GDP is forecast -5.8%,” they said.