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US stocks erased their 2020 losses on Monday, boosted by optimism that the US economy is poised for a quicker-than-expected comeback after being brought to a near standstill by the coronavirus pandemic. The Dow Jones industrial average rose 461.46 points, or 1.7 percent, to close at 27,572.44, building on Friday’s 829-point rally fueled by a …
US stocks erased their 2020 losses on Monday, boosted by optimism that the US economy is poised for a quicker-than-expected comeback after being brought to a near standstill by the coronavirus pandemic.
The Dow Jones industrial average rose 461.46 points, or 1.7 percent, to close at 27,572.44, building on Friday’s 829-point rally fueled by a shockingly strong jobs report.
The tech-heavy Nasdaq rose 1.1 percent to close at a new, all-time high of 9,924.74,breaking the intraday record it posted Friday. And the S&P 500 jumped 1.2 percent to 3,232.39, slightly above where it closed Dec. 31 of last year.
“The opening of the economy has been for the most part on schedule, and the more the economy can open without significant outbreaks, the more we’re seeing confidence weave its way back into the consumer optimism,” said Quincy Krosby, chief market strategist for Prudential Financial.
Airlines got a boost Monday amid hopes about Americans resuming travel, with shares in United, American and Delta each climbing more than 5 percent. Beleaguered planemaker Boeing led the Dow with an 11.5 percent jump as of 11:51 a.m.
Monday’s surge followed a week in which the Dow gained 6.8 percent as investors digested a slew of economic data suggesting the worst of the coronavirus downturn is over.
Among them was Friday’s jobs report showing the economy added 2.5 million jobs in May — in defiance of widespread expectations for further losses — along with improved manufacturing activity and consumer confidence last month.
“You’re getting people who had a long weekend to rethink things,” said Jim Paulsen, chief investment strategist at the Leuthold Group. “I don’t think any of them are putting all their life savings in, but they’re probably just upping their exposure a little bit on the idea that this reopening thing, that could go on for a little while.”
But the market could be in for a pullback given that the threat of the virus has not disappeared, according to experts.
“The market showing a V-shaped recovery suggests that we’re right back where we were, and we haven’t yet figured out what long-term damage was done,” said Lamar Villere, portfolio manager of the Villere Balanced Fund.
Last week’s stock rally came despite widespread civil unrest in the US over police brutality and the killing of George Floyd in Minneapolis.
Protests continued over the weekend, with thousands of people taking to the streets in New York, Washington and other cities. But investors are far more interested in the positive effects of the economy reopening, according to Paulsen.
“It’s not like that issue will have zero impact on the future of profitability. It certainly will,” he said. “But the problem is right now it just pales in comparison to something that’s right there, right now, it’s immediate, and it’s massive: putting the on switch back on in the economy.”
