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US Market rises on recovery hopes

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The US equity market finished session higher on Wednesday, 20 May 2020, on optimism about the prospects for economic recovery thanks to American businesses reopening and the coronavirus pandemic beginning to recede. Meanwhile, upbeat quarterly results from retailers Target and Lowe's also boosted sentiments. At closing bell, the Dow Jones Industrial Average advanced 369.04 points, or 1.5%, to 24,575.90. The S&P 500 - a gauge of US retirement and education savings accounts - climbed 48.67 points, or 1.7%, to 2,971.61. The tech-heavy Nasdaq Composite Index rose 190.67 points, or 2.1%, to 9,375.78.

The rally on Wall Street partly supported by continued optimism about an economic recovery as states begin to reopen following the coronavirus-induced lockdowns and the Federal Reserve's programs to combat the coronavirus crisis and the increase in its balance sheet to nearly $7 trillion.

Positive sentiment was also generated in reaction to earnings news from retailers Target and Lowe's.

Lowe's fiscal first-quarter profit and sales rose well above expectations, and said the sales momentum has continued into May. Target beat first-quarter earnings and revenue expectations with help from its digital sales capabilities as e-commerce grew by 141% during the period.

Traders largely shrugged off a report raising doubts about Moderna's (MRNA) potential coronavirus vaccine. The report questioned the validity of the results of Moderna's vaccine trial.

ECONOMIC NEWS: Fed Minutes Highlight Extraordinary Uncertainty And Considerable Risks To Economic Activity In The Medium Term-- In addition to the severely adverse near-term effects of the coronavirus pandemic, the minutes of the Federal Reserve's latest monetary policy meeting noted the outbreak and the measures undertaken to contain it have also created an extraordinary amount of uncertainty and considerable risks to economic activity in the medium term. The minutes said participants at the late-April meeting discussed several alternative scenarios with regard to the behaviour of economic activity in the medium term that all seemed about equally likely.

A number of participants believed there was a substantial likelihood of additional waves of the coronavirus outbreak, which could lead to further economic disruptions. The participants warned the disruptions, including additional periods of mandatory social distancing, greater supply chain dislocations, and a substantial number of business closures and loss of income, could lead to a protracted period of severely reduced economic activity. At the same time, the minutes noted economic activity could recover more quickly if the pandemic subsided enough for households and businesses to become sufficiently confident to relax or modify social-distancing behaviors over the next several months.

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, May 21 2020. 11:24 IST