Despite a surge in coronavirus cases across the country, the market finished mostly higher on Wednesday—the first day of the third quarter, after stocks got a boost from positive coronavirus vaccine news and strong U.S. economic data.
The S&P 500 was up 0.5% on Wednesday, while the tech-heavy Nasdaq Composite gained 1% and the Dow Jones Industrial Average fell 0.3%.
A new study of a potential coronavirus vaccine developed by Pfizer and BioNTech on Wednesday showed positive results creating neutralizing antibodies in patients.
While the results were released online, they have not yet been reviewed by a medical journal. Shares of Pfizer jumped more than 5% on the news.
Stocks slashed earlier losses after ADP and Moody’s Analytics said that private payrolls jumped by 2.37 million in June, while payrolls for May were revised to a gain of more than 3 million, from a loss of 2.76 million.
The Institute for Supply Management also released its latest survey of U.S. manufacturing activity, which rebounded from a sharp downturn in May and hit its highest level since April 2019.
Shares of companies that would benefit from a reopening of the economy—including airlines, cruise stocks and some retailers—moved higher on Wednesday.
The stock market’s recent gains come amid a backdrop of increasing coronavirus cases across the country: Many states continue to report record high numbers of cases, while more than 12 have now paused or rolled back their reopening plans.
White House health advisor Dr. Anthony Fauci warned on Tuesday that at the current pace of new cases, the United States could soon surpass 100,000 new infections per day.
“Seriously, we’re doing this again?” says Vital Knowledge founder Adam Crisafulli of the latest vaccine news. “Investors really need to stop chasing these reports.”
The market closed out its best quarter in decades after finishing higher on Tuesday. Stocks have bounced sharply from their coronavirus recession lows in late March: The Dow surged 18% in the second quarter, its best quarter since 1987. The S&P jumped over 20% for its best quarter since 1998. Both are still down for the year, however: The Dow by 11% and the S&P by nearly 5%.
WHAT TO WATCH FOR
On Tuesday, Federal Reserve Chair Jerome Powell and Treasury Secretary Steven Mnuchin both testified in front of the House Financial Services Committee, but provided different opinions on the timeline for an economic recovery. Secretary Mnuchin said he expected economic conditions to “improve significantly” in the second half of the year, while Fed chair Powell took a more measured approach, warning that “the path of the economy is highly uncertain.”