U.S. stocks booked sharp gains Wednesday, snapping a three-day selloff that a day earlier drove the Nasdaq Composite into a correction at the fastest pace in history, following its record high last week.
On Wednesday the Nasdaq posted its largest one day point and percentage gain since Wednesday, April 29, according to Dow Jones Market Data.
How did major benchmarks fare?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.66% rose 439.58 points, or 1.6%, to end at 27,940.47, while the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.74% closed at 3,398.96, an increase of 67.12 points, or 2%. The Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +0.88% jumped 293.87 points, 2.7%, to finish at 11,141.56, while booking its best daily percent gain since April 29, according to Dow Jones Market Data.
The Nasdaq Composite on Tuesday ended with a loss of 465.44 points, or 4.1%, at 10,847.69—marking a pullback of slightly more than 10% over three trading sessions for its fastest ever fall from a record into correction territory. The Dow fell 632.42 points, or 2.3%, ending at 27,500.89, while the S&P 500 dropped 95.12 points, or 2.8%, to close at 3,331.84.
What drove the market?
Technology, and stocks that benefited from the work-from-home trend in recent months, recovered some ground Wednesday.
“Broadly, the technology sector is leading the recovery,” said James Ragan, director of Wealth Management Research at D.A. Davidson, in an interview with MarketWatch, adding that early signs of a rotation into downtrodden stocks has fizzled.
“We could say that today, any rotation has stalled out,” he said. “Over the past few months, any time we get a little more strong performance from value groups, it doesn’t really last.”
At the same time, concerns have been mounting that valuations for top performers have gotten euphoric, leaving the market vulnerable to a near-term pullback and more volatile trade.
“Those gains didn’t make a lot of sense,” said Donald Calcagni, chief investment officer with Mercer Advisors, in an interview with MarketWatch. “When you have Amazon trading at 120 times earnings and the economy is contracting 32%, that just doesn’t make sense.”
Calcagni spent the past several months with a healthy respect for the coronavirus. “If there are businesses, communities, states, that say, to hell with it, let’s reopen, I share that emotion, but people are still getting sick,” he pointed out. “And the reality is that’s going to spook consumers. If the consumer is spooked they’re not going to spend. That’s going to weigh on the economy.”
He calls himself “bearish” over the next few months as those economic headwinds continue and the likelihood of a contested U.S. presidential election looms in November.
In pandemic news, the global death toll edged toward 900,000 and a trial for a potential COVID-19 vaccine being developed by AstraZeneca PLC /zigman2/quotes/203048482/delayed UK:AZN +0.72% /zigman2/quotes/200304487/composite AZN +0.62% was halted after a participant was struck by an unexplained illness. The drugmaker, in what it described as a “routine action,” paused late-stage trials of its vaccine candidate.