By Geoffrey Smith
Investing.com -- U.S. stock markets climbed in morning trading Wednesday on fresh hopes that the worst of the Covid-19 pandemic will soon be past.
At 11:40 AM ET (1540 GMT) the Dow Jones Industrial Average was up 588 points, or 2.6% from Tuesday’s close, putting it on course for its highest close in over three weeks. The S&P 500 was up 2.3%, while the Nasdaq Composite was up 2%.
Sentiment was lifted by a new projection of a much lower death toll from the Covid-19 virus than previously thought. While the Trump administration had warned of over 100,000 possible deaths in the U.S. last week, researchers at the University of Washington estimated that the actual number may be limited to about 60,000. It had earlier predicted over 80,000.
The growth rate of new infections nationwide fell to only 8.1% on Tuesday, the latest in a string of daily declines, even though both caseload and mortality statistics continue to hit new highs in absolute terms.
For some at least, that means that the market bottom is near enough to warrant increasing exposure to stocks. Oaktree Capital founder Howard Marks told investors that he was no longer inclined to “play defense” but rather to buy stocks that offered value at their current levels. Goldman Sachs is also upbeat.
“Our own advice to clients is that right now is a good time to get back into markets and take advantage of the decline in equity markets to position for the rebound,” Bloomberg quoted Silvia Ardagna, managing director in the investment strategy group within Goldman Sachs (NYSE:GS) Private Wealth Management, as saying.
Short-term economic numbers still look miserable, however. The Mortgage Bankers Association’s purchase index slumped 12.2% in the period ended April 3. That rounded off its sharpest monthly drop since mid-2010.
Also, France’s central bank said it expects first-quarter GDP to have shrunk by 6% while Germany’s leading research institutes predicted a 9.8% contraction in their country in Q2.
McDonald’s (NYSE:MCD) stock fell 1.8% despite saying comparable sales fell 22% in March, and 3.4% for the first quarter. Analysts had expected quarterly sales to fall 0.9%.
Short-seller Carson Block announced a short position in online health marketplace eHealth (NASDAQ:EHTH) stock, puhsing it down 12.2%. Block's Muddy Waters Research said the company uses aggressive accounting techniques to hide a lack of underlying profitability.
Muddy Waters had announced a short position on Tuesday in Chinese Netflix (NASDAQ:NASDAQ:NFLX) wannabe iQIYI. iQIYI (NASDAQ:IQ) stock rose 3.2%Tuesday but was down 7.9% after early trade on Wednesday.
United Parcel Service (NYSE:NYSE:UPS) stock was up 5% and FedEx (NYSE:NYSE:FDX) stock rose 7% after reports that Amazon.com (NASDAQ:NASDAQ:AMZN) is suspending a third-party delivery service that competed directly with them.
Zoom Video (NASDAQ:ZM) stock was up 8.4% after the video call software maker hired Facebook (NASDAQ:NASDAQ:FB) veteran Alex Stamos as an advisor to help it address concerns about its privacy policies.