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U.S. Stocks Close Firmly Positive On Upbeat Vaccine News, Goldman Sachs Earnings

wallstreet sept27 15jul20 lt

Stocks fluctuated over the course of the trading session on Wednesday but largely maintained a positive bias before ending the day mostly higher. Adding to the strong gains posted in the previous session, the Dow and the S&P 500 finished the day at their best closing levels in over a month.

The major averages finished the day firmly positive but well off their early highs. The Dow advanced 227.51 points or 0.9 percent to 26,870.10, the Nasdaq rose 61.92 points or 0.6 percent to 10,550.49 and the S&P 500 climbed 29.04 points or 0.9 percent to 3,226.56.

The continued strength on Wall Street came as upbeat news on the coronavirus vaccine front helped traders shrug off news of a record single-day spike in new Covid-19 cases in the U.S.

Biotech firm Moderna (MRNA) said its experimental vaccine for Covid-19 was safe and produced strong immune responses in all 45 patients in an ongoing early-stage human trial.

An interim analysis of the open-label Phase 1 study of the vaccine candidate was published in the New England Journal of Medicine.

The latest news follows other recent positive developments on the coronavirus treatment and vaccine fronts, which have generated optimism the economic threat posed by the pandemic could be addressed in the relatively near future.

Upbeat earnings news from Goldman Sachs (GS) added to the positive sentiment, with the financial giant reporting much stronger than expected second quarter results.

Goldman Sachs reported earnings of $6.26 per share on revenues of $13.3 billion compared to analyst estimates for earnings of $3.78 per share on revenues of $9.8 billion. The company benefited from strong results in its trading and investment banking divisions.

Traders also reacted positively to a report from the Federal Reserve showing U.S. industrial production spiked by even more than anticipated in the month of June.

The report said industrial production soared by 5.4 percent in June after jumping by 1.4 percent in May. Economists had expected production to surge up by 4.3 percent.

Despite the substantial increase, the Fed noted industrial production remained 10.9 percent below its pre-pandemic February level.

Sector News

Airline stocks moved sharply higher amid optimism about a coronavirus vaccine, driving the NYSE Arca Airline Index up by 8.7 percent.

Substantial strength was also visible among oil service stocks, as reflected by the 4.7 percent spike by the Philadelphia Oil Service Index.

The rally by oil service stocks came as the price of crude oil for August delivery jumped $0.91 to $41.20 a barrel following the release of a report showing a much bigger than expected weekly drop in crude oil inventories.

Financial stocks also saw considerable strength following the upbeat earnings news from Goldman Sachs, with the KBW Bank Index and the NYSE Arca Broker/Dealer Index surging up by 3.2 percent and 3 percent, respectively.

Housing, natural gas, and transportation stocks also showed significant moves to the upside, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Wednesday, although China's Shanghai Composite Index bucked the uptrend and tumbled by 1.6 percent. Japan's Nikkei 225 Index and Australia's S&P/ASX 200 Index jumped by 1.6 percent and 1.9 percent, respectively.

The major European markets also showed strong moves to the upside on the day. While the French CAC 40 Index soared by 2 percent, the U.K.'s FTSE 100 Index and the German DAX Index both surged up by 1.8 percent.

In the bond market, treasuries climbed well off their worst levels but still closed modestly lower. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.5 basis points to 0.630 percent after reaching a high of 0.658 percent in early trading.

Looking Ahead

Trading on Thursday may be impacted by reaction to a slew of U.S. economic data, including reports on initial jobless claims, retail sales and homebuilder confidence.

Earnings news will also continue to attract attention, with Bank of America (BAC), Johnson & Johnson (JNJ) and Morgan Stanley (MS) among the companies releasing their quarterly results before the start of trading.

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