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U.S. Stocks Seeing Further Upside After Initial Jump

wallstreet aug15 24mar20 lt

After moving sharply higher early in the session, stocks have seen some further upside over the course of the trading day on Tuesday. The major averages are showing a substantial rebound following the sell-off seen in recent sessions.

Currently, the major averages are just off their new highs of the session. The Dow is up 1,625.66 points or 8.7 percent at 20,217.59, the Nasdaq is up 455.53 points or 6.6 percent at 7,316.20 and the S&P 500 is up 171.10 points or 7.7 percent at 2,408.50.

The rally on Wall Street comes as traders pick up stocks at reduced levels amid indications Democrats and Republicans are close to an agreement on a massive fiscal stimulus bill.

Treasury Secretary Steve Mnuchin and Senate Minority Leader Chuck Schumer, D-N.Y., both expressed optimism a deal on a nearly $2 trillion stimulus package would be reached today.

"We expect to have an agreement tomorrow morning," Schumer told reporters after meeting with Mnuchin last night. "There's still a few little differences. Neither of us think they're in any way going to get in the way of a final agreement."

The optimism about a potential agreement comes even though the stimulus bill failed to clear a key procedural hurdle in the Senate for two straight days amid opposition from Democrats.

Most Democratic Senators voted against advancing the bill amid complaints that the legislation does too much to bail out companies and not enough to provide assistance to workers.

Positive sentiment may also have been generated in reaction to President Donald Trump's comments suggesting the coronavirus-related shutdown of much of the country could end sooner than many anticipated.

"America will again and soon be open for business. Very soon," Trump said at a news conference on Monday. "A lot sooner than three or four months."

Trump's remarks represent a sharp contrast to his comments just last week indicating the coronavirus pandemic would not be under control until July or August.

The president's eagerness to get the economy back up and running may also lead to conflict with public health officials, who are likely to continue to call for social distancing.

Sector News

Brokerage stocks have moved sharply higher over the course of the session, driving the NYSE Arca Broker/Dealer Index up by 12.4 percent. The index is bouncing off its lowest closing level in over three years.

Substantial strength also remains visible among energy stocks, with the NYSE Arca Oil Index and the Philadelphia Oil Service Index jumping by 12 percent and 11.7 percent, respectively.

The rally by energy stocks comes amid a relatively modest increase by the price of crude oil, as crude for May delivery is rising $0.29 to $23.65 a barrel.

Housing stocks also continue to see considerable strength in mid-day trading, moving significantly higher along with chemical, transportation and steel stocks amid broad based buying interest.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved sharply higher during trading on Tuesday. Japan's Nikkei 225 Index soared by 7.1 percent, while Hong Kong's Hang Seng Index surged up by 4.5 percent.

The major European markets have also shown strong moves to the upside on the day. While the German DAX Index has spiked by 8.7 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index are up by 6.5 percent and 6.3 percent, respectively.

In the bond market, treasuries are giving back ground after moving sharply higher over the past few sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 10.3 basis points to 0.867 percent.

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