US STOCKS-Stimulus hopes lift Wall Street after historic oil rout
New York: Wall Street's main indexes rose on Wednesday on signs of more stimulus to aid small businesses ride out the coronavirus-induced economic slump and a recovery in oil prices.
U.S. crude and benchmark Brent prices edged higher after a collapse in the past two days, sending the S&P 500 energy index up 3.4%, with Exxon Mobil Corp and Chevron Corp among the top gainers on the blue-chip Dow Jones.
All the 11 major S&P 500 sub-indexes were trading higher, as the U.S. Senate approved a relief package of $484 billion, adding to trillions of dollars in stimulus that have helped Wall Street rebound from its March lows.
The House of Representatives is expected to clear the bill on Thursday.
"The (stimulus) response times have been way faster than what you saw in 2008. What you're seeing is the tail risk removal that stops the equity downturn and allows the market to actually look forward," said Anik Sen, portfolio manager at PineBridge Investments in New York.
The benchmark S&P 500 is still 17% below its record high as state-wide shutdowns spark layoffs and crush consumer spending, putting several sectors at the risk of collapse.
Estimates for U.S. jobless claims for the latest week range as high as 5.5 million, while a reading on April U.S. factory activity is likely to fall to levels last seen during the 2008 financial crisis. Both reports are due Thursday.
Analysts have drastically cut their S&P 500 earnings expectations for the first and second quarters and are now projecting a corporate recession for 2020, according to IBES data from Refinitiv.
A week after the big U.S. banks issued dismal 2020 forecasts, consumer discretionary and technology firms fared slightly better as the lockdown measures boosted demand for online streaming and home delivery of meals.
Prospects for the future
"Investors are looking for what companies are going to say on their prospects for the future and are gauging the ability of management to navigate through this turbulent time," said Andre Bakhos, managing director at New Vines Capital LLC in Bernardsville, New Jersey.
Fast-casual chain Chipotle Mexican Grill Inc jumped 10.2% after it reported soaring digital and home delivery sales and said it had enough cash and liquidity to get through the next year.
Netflix Inc more than doubled its own projections for new customers in the first quarter. However, its shares fell 2.2% as it forecast a weaker second half if the lockdown measures were to be lifted.
At 11:32 a.m. ET, the Dow Jones Industrial Average was up 417.04 points, or 1.81%, at 23,435.92, the S&P 500 was up 55.30 points, or 2.02%, at 2,791.86 and the Nasdaq Composite was up 190.82 points, or 2.31%, at 8,454.05.
Advancing issues outnumbered decliners more than 3-to-1 on the NYSE and 2-to-1 on the Nasdaq.
The S&P index recorded one new 52-week highs and one new low, while the Nasdaq recorded 19 new highs and 12 new lows.