Wall Street closed sharply higher on Wednesday after former vice president Joe Biden’s surprise victory in the Super Tuesday Democratic primary contests. Moreover, the decision of U.S. Congress and major global economic institutions like the IMF and World Bank to release huge funds in order to minimize coronavirus’ impact on the global economy also strengthened investors’ confidence. All three major stock indexes ended in the green.
The Dow Jones Industrial Average (DJI) jumped 4.5% or 1,173.45 points to close at 27,090.86. The S&P 500 climbed 4.2% or 126.75 points to close at 3,130.12. Meanwhile, the Nasdaq Composite Index closed at 9,018.09, soaring 4% or 334 points. A total of 11.04 billion shares were traded Wednesday, higher than the last 20-session average of 10 billion. The CBOE VIX decreased 13.1% to close at 31.99. Advancers outnumbered decliners on the NYSE 5.34-to-1 ratio. On Nasdaq, 3.64-to-1 ratio favored advancing issues.
How Did The Benchmarks Perform?
The Dow closed in positive territory with all 30 components of the blue-chip index closed in the green. The benchmark S&P 500 ended in the green with each of its 11 sectors posted gains. The Health Care Select Sector SPDR (XLV) and the Utilities Select Sector SPDR (XLU) jumped 5.8% and 5.7%, respectively. Meanwhile, the tech-laden Nasdaq Composite finished in the green driven by rally of large-cap stocks. Notably, the index returned to positive territory year to date.
Biden Wins Big on Super Tuesday
Wall Street rallied on a slew of Democratic primary victories by former vice president Joe Biden on Super Tuesday. Biden has won in Virginia, Massachusetts, North Carolina, Alabama, Oklahoma, Arkansas, Tennessee and Minnesota. This followed Biden’s strong win in South Carolina on Feb 29.
Economists now believe that Biden’s win has staved off “America’s nightmare” in case Bernie Sanders had won. Biden is more known for his moderate views, unlike the self-described democratic socialist Sanders.
With Biden’s win minimizing risks to markets and the domestic economy remaining in pretty good shape, stocks rallied across the board. Major winners were UnitedHealth Group Inc. (NYSE:UNH) and Centene Corp. (NYSE:CNC) with a gain of 10.7% and 15.6%, respectively. UnitedHealth Group carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Various Preventive Measures
Several governments, central banks and global economic agencies are taking preventive measures to revive global economic growth. In the United States, the Fed reduced the benchmark lending rate by 50 basis points and the Congress has decided to release around $8 billion emergency funds to fight the spread of the coronavirus domestically.
The Bank of Canada has lowered benchmark interest rate by half a percentage point to 1.25%. The Reserve Bank of Australia reduced cash rate by 25 basis-points to a new low of 0.5%. The Bank of Japan boosted investor confidence with announcement that it would provide "ample liquidity" to keep financial markets stable.
Moreover, the International Monetary Fund and the World Bank have decided to release $50 billion and $12 billion, respectively, as aid packages for coronavirus affected countries in order to revive global economic growth.
Economic Data
The Institute of Supply Management reported that the U.S. Services index for the month of February jumped to 57.3%, marking the highest level since February 2019. The reading also surpassed the consensus estimate of 54.9% and January’s reading of 55.5%. Notably, any reading above 55% means extraordinary growth of service-centric industries. Meanwhile,new orders for the services industry jumped to a reading of 63.1% in February from 56.2% in January.
According to an estimate from ADP (NASDAQ:ADP) and Moody’s Analytics, theU.S. private sector added 183,000 in February, down slightly from 209,000 in the prior month.Large businesses, small businesses and medium-sized businesses added 133,000, 24,000 and 26,000 jobs, respectively.
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