U.S. Stocks Show Substantial Rebound After Biden’s Big Night
Stocks have moved sharply higher over the course of the trading day on Wednesday, more than offsetting the steep losses posted in the previous session. The major averages moved significantly higher early in the session and saw further upside as the day progressed.
The major averages reached new highs going into the close, ending the session near their best levels of the day. The Dow spiked 1,173.45 points or 4.5 percent to 27,090.86, the Nasdaq soared 334.00 points or 3.9 percent to 9,018.09 and the S&P 500 jumped 126.75 points or 4.2 percent to 3,130.12.
The rebound on Wall Street came after former Vice President Joe Biden performed much better than expected in yesterday’s Super Tuesday contests, including an upset victory over Senator Bernie Sanders in delegate-rich Texas.
Sanders earned a significant chunk of delegates by winning California, but Biden pulled off big victories in a number of smaller states such as North Carolina, Virginia and Minnesota.
The results of yesterday’s contests would appear to set up a head-to-head matchup between the very liberal Sanders and the more moderate Biden.
While either Democratic candidate is expected to face a tough fight against President Donald Trump, Biden is seen as likely to be a much more pro-business president than Sanders.
Adding to the positive sentiment, the Institute for Supply Management released a report showing service sector growth unexpectedly accelerated to a one-year high in February.
The ISM said its non-manufacturing index climbed to 57.3 in February from 55.5 in January, with a reading above 50 indicating growth in service sector activity.
The increase by the reading on service sector activity came as a surprise to economists, who had expected the index to edge down to 54.9.
With the unexpected uptick, the non-manufacturing index reached its highest level since hitting 58.5 in February of 2019.
A separate report from payroll processor ADP released showed private sector employment increased by more than expected in the month of February, although the report also showed a notable downward revision to the surge in jobs in the previous month.
ADP said private sector employment climbed by 183,000 jobs in February compared to economist estimates for an increase of about 170,000 jobs.
However, the report also showed the spike in jobs in January was downwardly revised to 209,000 from the previously reported 291,000.
Health insurance stocks turned in some of the market’s best performances on the heels of Biden’s big night, with Anthem (ANTM), UnitedHealth (UNH) and Cigna (CI) posting standout gains.
Biden has called for expanding the healthcare reform law known as Obamacare rather than scrapping private insurance in favor of a Medicare-for-all plan, as Sanders has proposed.
Significant strength was also visible among pharmaceutical stocks, as reflected by the 5.3 percent jump by the NYSE Arca Pharmaceutical Index.
Interest rate-sensitive utilities, commercial real estate and housing stocks also saw considerable strength after yesterday’s surprise rate cut by the Federal Reserve.
Biotechnology, semiconductor, software and retails stocks also showed strong moves to the upside, while oil service stocks extended the sell-off seen in the previous session.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan’s Nikkei 225 Index inched up by 0.1 percent, while Hong Kong’s Hang Seng Index edged down by 0.2 percent.
Meanwhile, the major European markets all moved significantly higher on the day. While the U.K.’s FTSE 100 Index jumped by 1.5 percent, the French CAC 40 Index and the German DAX Index surged up by 1.3 percent and 1.2 percent, respectively.
In the bond market, treasuries extended a recent upward move, leading the yield on the benchmark ten-year note to close below 1 percent for the first time ever. The ten-year yield, which moves opposite of its price, dipped 1.8 basis points to 0.992 percent.
The latest news on the coronavirus front may attract attention on Thursday, overshadowing reports on weekly jobless claims, labor productivity, and factory orders.
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