MANHATTAN (CN) — As more of America reopened during Memorial Day weekend, Wall Street bet big that cases of Covid-19 will continue to decrease, posting huge gains Tuesday morning.
The Dow Jones Industrial Average gained about 529 points by the closing bell, settling just under 25,000 points. The Dow is now higher than any point since lockdowns began but still remains almost 4,000 points lower than where it started in January. The S&P 500 and Nasdaq had similarly impressive outings on Tuesday.
Even in hot spots like New York and New Jersey, the loosening of lockdown orders contributed to today's rally. Over the holiday weekend, some restaurants began to repopulate, beaches and pools lured recreation-starved families, and the New York Stock Exchange began allowing brokers on its trading floor for the first time since the end of March.
Cases of Covid-19 have slowed nationwide in recent weeks, though cases in parts of Asia, Africa and South America are still rising, according to the World Health Organization. Dr. Mike Ryan, executive director of WHO’s emergencies program, also warned Monday of an “immediate second peak” of new coronavirus cases later this year.
Markets slumped late last week after U.S.-Sino relations continued to sour on news that China would ban secession and foreign interference in Hong Kong, threatening to end the “one country, two systems” policy that has been in place since 1997. That policy recognized Hong Kong as part of China but allowed the city to keep its own administrative systems and capitalist economy.
In response, the U.S. Commerce Department announced late Friday it was adding two dozen foreign companies to its “Entity List,” which prohibits them from exporting or transferring certain items.
China has decried the move, with a foreign ministry spokesman telling Bloomberg News the United States should “correct its mistakes” and “stop interfering in China’s internal affairs.” The spokesman warned that China would take “all necessary measures” to safeguard its sovereignty.
Investors and consumers both are betting that government assistance will continue through the summer and perhaps even expand. The New York Federal Reserve Bank’s public policy survey from April saw a huge jump — 20 percentage points — in the number of respondents expecting federal welfare benefits to increase over the next year.
Respondents also increasingly feel that more unemployment benefits will result in a more positive impact on households, the survey showed.
Investors also had been hoping for an additional stimulus package by lawmakers, as well as tinkering around the edges on existing programs, such as the Paycheck Protection Program. The PPP has had numerous problems since rollout, not least of which was confusion over how loans could be forgiven.
The Senate had been working on a bill to grant borrowers additional flexibility on loan repayment, double the period during which small companies could use the funds, and extend the program through 2020. But senators adjourned for recess on Thursday without a final bill. The Senate returns on June 1.
More than 5.5 million cases of Covid-19 have been reported worldwide, of which 346,000 have died, according to data compiled by Johns Hopkins University. In the United States, more than 1.6 million people have contracted the virus, while 98,000 have died.
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