Major equity benchmarks rallied anew on Wednesday amid signs there’s pent up demand in various cyclical sectors of the economy and that reopening headlines remain a significant catalyst for riskier assets.
- The S&P 500 jumped 1.67%.
- The Dow Jones Industrial Average added 1.52%
- The Nasdaq Composite gained 2.08%
- Amid signs that previously locked down consumer and travelers want to start living life again, American Express (NYSE:AXP) was the best-performing name in the Dow today, gaining more than 4%.
The rally in communication services and technology stocks has been so strong that the Invesco QQQ (NASDAQ:QQQ) is only a little more than 2% below its all-time highs seen in March. Proving the potency of monetary policy, the Nasdaq-100 is soaring at a time when U.S. unemployment is doing the same.
However, monetary policy isn’t the only policy that matters. Fiscal policy is vital too, and some (probably all) members of the Federal Reserve agree with that sentiment, with one noting today more needs to be done to help consumer confidence rebound.
While rejuvenating consumer confidence and consumption could take awhile in the wake of the novel coronavirus, markets are betting that rebound will happen as highlighted by 25 of 30 Dow stocks trading higher in late trading.
Disney at it Again
Disney (NYSE:DIS) was in the upper tier of Dow winners today amid rumors that if the NBA decides to wrap up its 2020 season, it will do so at facilities owned by Disney in Orlando.
It’s not immediately clear if the league is looking to simply conclude its regular season there and then move onto a traditional playoff format or do both in Orlando, but Disney executives say they are confident they’ll soon be hosting professional basketball in Florida.
Passing on Powder
Johnson & Johnson (NYSE:JNJ) was one of the Dow laggards after revealing Tuesday afternoon it will halt sales of talcum-based baby powder in the U.S. and Canada.
This is a product that was previously the epicenter of litigation against the company and while JNJ said there was a campaign of misinformation involved, consumer demand for the product nonetheless decreased.
Aid Helps, More Needed
McDonald’s (NYSE:MCD) said today it has $40 million set aside to help franchisees grappling the effects of Covid-19, but more cash is likely needed. The company is also taking a hard line, saying aid will be available on a case-by-case basis and that if franchise owners need more money, they will have to pursue other avenues or consider selling their stores.
Just a couple of months ago, this seemed like an impossibility, but today, some oil market observers believe it’s possible that demand will outstrip supply later this year. Time will tell if that forecast is accurate, but it’s hard to image better news than that for Chevron and the energy sector.
Bottom Line on the Dow Jones Today
Not surprisingly, reopening news is positive and stocks are reflecting as much. The weekly test courtesy of jobless claims arrives tomorrow and if there’s any evidence to suggest claims are declining in material fashion, stocks could rally anew.
The reopening process is a slow slog, but investors are gravitating to incremental signs, including news that live sports — though almost certainly without fans — could be returning next month. That’s one more step in the right direction and it is notable for financial markets.
Todd Shriber has been an InvestorPlace contributor since 2014. As of this writing, he did not hold a position in any of the aforementioned securities.