U.S. stocks closed sharply higher Tuesday, lifted by growing expectations that the worst of the COVID-19 pandemic may have passed.
But as first-quarter corporate earnings season kicks off, the economic fallout tally has only begun. Going forward, we will see the real impact of government efforts on businesses.
The Dow Jones Industrial Average rose 558.99 points, or 2.4%, to end at 23,949.76; the S&P 500 index gained 84.43 points, or 3.1%, to close at 2,846.06; and the Nasdaq Composite Index advanced 323.32 points, or 4%, to finish at 8,515.74.
The Nasdaq finally exited bear-market territory after its 20% plunge in March, joining the Dow and S&P 500 on the sunny side.
Ten U.S. states that account for nearly 38% of the country’s economy began working on plans to reopen for business, Reuters reported, as parts of Europe and the U.S. saw a leveling-off in the number of COVID-19 cases and a subsequent lift for global equities.
“The market moves are about positive feelings about the trajectory of the virus,” Shawn Cruz, manager of trader strategy at TD Ameritrade, told MarketWatch, “Investors are relieved that we’re having the discussion about planning to open things. It’s looking like sometime in the second half of the year, we’ll return to some sort of normalcy, and markets are pricing that in.”
What Kind of Investment Can Persuade a Millennial to Invest?
The escalating coronavirus pandemic has ushered in a new era of stock market volatility, as investors come to terms with seemingly never-ending, history-making daily swings. But it has also shone a spotlight on a promising investment opportunity — one that’s been winning the hearts of millennials.
Sustainable investments — those focused on companies with strong environmental, social and corporate governance (ESG) principles — outperformed their conventional counterparts in the first quarter of 2020. Yes, even as the outbreak sent most of the markets crashing.
In the first three months of the year, 70% of sustainable equity funds recorded returns in the top half of their broad-based peer group, according to investment research firm Morningstar. Among those, 44% scored within the top quartile. When the full extent of the pandemic became clear in early March, HSBC found that ESG-aware companies outperformed other stocks by up to 5.7%.
Of course, sustainable funds still suffered heavy losses with last month’s downturn. However, the losses were notably lower compared to traditional funds. Morningstar’s head of sustainability research, Jon Hale, said that this has a lot to do with the underlying principles of ESG-focused companies, which place customers and employees at the forefront.
Hale adds, “It’s very simple, really — companies truly focused on the well-being of their workers and customers are able to make the right decisions more quickly in a major crisis like this one.”
Around The World
Equity markets rallied globally on Tuesday as Chinese trade data defied expectations of a deep downturn from the coronavirus pandemic, igniting hopes that world economies can soon recover. This development is also removing the safe-haven allure of the greenback.
Meanwhile, oil prices fell more than 6% as investors doubted that record supply cuts by OPEC and other producers would soon rebalance the markets.
Gold soared nearly 2% and hit its highest since late 2012 as investors piled in to hedge against potential inflation and currency debasement resulting from massive global stimulus measures.
Data also showed that China’s exports fell only 6.6% in March from a year ago, far less than the expected 14% plunge. Imports fell 0.9% compared with expectations for a 9.5% drop.
This report, in addition to clear evidence that the world’s lockdown measures were working caused a massive stock rally around the globe. Even though things appear optimistic, keep in mind that the World Health Organization continues to reiterate that the epidemic has yet to peak.