Stocks bounce higher on Wall Street a day after big rout

National News

A woman walks past an electronic stock board showing Japan’s Nikkei 225 index and New York Dow index at a securities firm in Tokyo Friday, June 12, 2020. Asian shares were moderately lower Friday after an overnight rout on Wall Street as investors were spooked by reports of rising coronavirus cases in the U.S. (AP Photo/Eugene Hoshiko)

Stocks moved broadly higher on Wall Street in afternoon trading Friday, recouping some of their losses a day after the market had its biggest rout since mid-March.

The S&P 500 was up 0.5% a day after dropping 5.9%. The benchmark index is still headed for a weekly loss following three weeks of solid gains. Small-company stocks and bond yields moved broadly higher, signs that pessimism about the economy was easing.

Technology companies accounted for a big slice of the gains. Financial, health care and industrial companies also helped lift the market. Utilities and household goods makers lagged. Companies that were among the biggest losers Thursday were big gainers, including airlines and cruise lines.

The rebound for stocks is a reversal for the market, which sold off for three days in a row as a rise in COVID-19 cases in the U.S. and a discouraging economic outlook from the Federal Reserve dashed investor optimism for a quick economic recovery as states lift stay-at-home orders and businesses reopen.

“Yesterday was the market taking a needed breath and saying ’OK, this is probably going to take more time than we were expecting,” said Willie Delwiche, investment strategist at Baird. “Today, it’s ‘maybe we overreacted yesterday.’”

Optimism that the reopening of the economy would be relatively quick once the restrictions put in place to stem the spread of the outbreak eased helped power the stock market’s red-hot comeback since late March. However, it’s unclear if Thursday’s market sell-off reflected a fundamental reassessment of the economic outlook or a one-off drop as traders cashed in on the market’s recent gains.

“We will continue to see volatility across the markets, as there is plenty of uncertainty on what the reopening of the U.S. economy looks like,” said Julie Fox, northeast private wealth market head at UBS Financial Services.

The comeback rally lost some of its early strength by Friday afternoon. The Dow Jones Industrial Average was up 267 points, or 1.1%, to 25,397. It had been up more than 800 points in the early going.

The Nasdaq, which climbed above 10,000 points for the first time on Wednesday, was up 0.6%. The Russell 2000 index of smaller companies also gave up much of the ground it gained in morning trading. It was up 1% after an early gain of 4.2%. European markets were mostly higher, but Asian markets ended broadly lower.

Bond yields headed broadly higher, a sign that pessimism about the economy was ebbing. The yield on the 10-year Treasury yield rose to 0.70% from 0.65% late Thursday.

Investors have been balancing optimism about the reopening of the economy against the possibility that the relaxing of restrictions will lead to a surge in new coronavirus infections and fatalities. Cases are climbing in nearly half the states, according to an Associated Press analysis, a worrying trend that could intensify as people return to work and venture out during the summer.

Despite the uncertainty, stocks have mounted a historic comeback the past couple of months, with the S&P 500 rallying 44.5% between late March and Monday, erasing most of its losses tied to the pandemic.

The swiftness and strength of the market’s recovery set the stage for the three-day run of selling for stocks this week, said Barry Bannister, head of institutional equity strategy at Stifel.

“The market itself was like a fever and yesterday’s break was like a fever breaking,” he said. Bannister said investors should wait for more certainty about the economic recovery, rather than “chasing this rally.”

Oil prices fluctuated between gains and losses. Benchmark U.S. crude oil for July delivery was down 0.1% to $36.31 a barrel. Brent crude oil for August delivery was up 0.5% to $38.75 a barrel.

France’s CAC 40 in Paris rose 0.5%, while Germany’s DAX lost an early gain and fell 0.2%. Britain’s FTSE 100 gained 0.5%, recovering from early losses on news that the British economy contracted by 20.4% in April, wiping out nearly two decades worth of growth.

Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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