By Anna Isaac, Chong Koh Ping and Karen Langley
U.S. stocks rose Wednesday, building on their gains for the week, as investors parsed signs that the spread of the coronavirus could be stabilizing in hard-hit locations.
The Dow Jones Industrial Average added 773 points, or 3.4%. The S&P 500 gained 3.4%, and the Nasdaq Composite rose 2.6%.
Positive signs in data on hospitalizations and intensive care admissions. suggest the number of new Covid-19 cases in New York could be stabilizing, though health officials have warned that people can't let down their guard.
"The market clearly is reacting Monday, to a certain extent yesterday and even today to incremental news that at the margin is a little better in terms of peaking of the virus, perhaps in Italy, perhaps in Spain, perhaps in New York City," said Hank Smith, co-chief investment officer at Haverford Trust.
Still, the U.S. death toll from the coronavirus has risen, with nearly 50% more deaths Tuesday than any previous day in the epidemic, according to a Wall Street Journal analysis of data from Johns Hopkins University. Elsewhere, European countries with falling infection rates began easing their restrictions, while some Asian leaders called for extended lockdowns to fight the pandemic.
Stocks have swung wildly in recent weeks as money managers grapple with how the pandemic has affected the value of businesses in every industry. The S&P 500 has climbed 9.1% this week but is down 16% in 2020.
"This is a time of unprecedented uncertainty," said Brian Yacktman, chief investment officer at YCG Investments. "What we're seeing is a complete ping-pong match with markets bouncing around so much because nobody knows how things will shake out in the short run."
The gains in U.S. stocks Wednesday were broad, with all 11 sectors of the S&P 500 gaining, led by the real estate and energy groups.
In trying to assess the depth of the looming recession that will be triggered by the coronavirus shutdown, some investors are examining the support offered by the Federal Reserve and how quickly it will prove to be effective in bolstering economic activity.
As well as slashing interest rates, the central bank unveiled other aggressive measures in March, pledging to buy government bonds, corporate-bond funds and municipal debt. It has boosted the short-term cash markets and even arranged to lend directly to companies.
"Bear markets tend to last longer than we think," said Gregory Perdon, co-chief investment officer at Arbuthnot Latham. "Although we have shock and awe with relaunching QE, we don't know that the on-the-ground economic support is going to be there quickly."
Investors are watching closely for when U.S. infections peak and start to decline and when shutdowns are lifted, according to Kelvin Tay, regional chief investment officer at UBS Global Wealth Management in Singapore. In time, he said, investor focus would shift to 2021 corporate earnings and how quickly economic activity can recover.
Since the Federal Reserve last month made use of a range of tools -- adopting "the entire playbook" it developed during the 2008 global financial crisis -- in quick succession, market functioning has improved, Mr. Tay said. "The markets have exited the panic-selling mode."
U.S. crude futures edged up 7.8% to $25.49 a barrel. American Petroleum Institute data released late Tuesday showed U.S. crude inventories rose by more than expected. The prices are too low for U.S. producers, leading to a significant slowdown in drilling activity, ING strategists said.
The Energy Information Administration's short-term energy outlook forecasts that U.S. oil output in 2020 will decline by 470,000 barrels a day from the previous year, versus a previous forecast for growth of 770,000 barrels a day.
In a sign of investors' wavering risk appetite, the yield on the 10-year U.S. Treasury ticked down to 0.731%, from 0.735% Tuesday, after rising earlier in the day.
European equities were mixed, with the pan-continental Stoxx Europe 600 edging up less than 0.1%. Fresh survey data on Wednesday showed that the German economy is expected to contract 9.8% in the second quarter due to the coronavirus pandemic and the containment measures put in place by authorities. That would be the sharpest decline recorded in Germany since at least 1970.
The indicators came on top of the news that European Union finance ministers had suspended talks on an economic crisis response on Wednesday morning, underscoring the deep differences within the bloc over how to share the mounting costs of the health crisis. Ministers had hoped to agree to a package of measures that could have provided half a trillion euros worth of support for the economy.
"There's disappointment," said Florian Hense, European economist at Berenberg Bank. "The longer it takes for finance ministers and leaders to come up with a solution, the weaker their ability to sell it to their home audience. We're not talking about economics any longer, but politics."
Any agreement reached would be a welcome signal for markets, Mr. Hense said.
In Asia, Japan's Nikkei 225 closed 2.1% higher. Late Tuesday, the government said it plans to pay households and businesses directly as part of a nearly $1 trillion economic package. It could subsequently use stimulus money to encourage consumer spending and travel.
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