Stocks surged Wednesday after former Vice President Joe Biden staged a major comeback in voter support during Super Tuesday.
The Dow Jones Industrial Average gained 1,173 points or 4.5%. The S&P 500 added 126 points or 4.2%. Markets recovered losses after a sell-off on Tuesday knocked each of the major stock market indices down by more than 2.8%.
While concerns over the spread of COVID-19 persist, politics was a focal point for investors with major wins for Biden during Super Tuesday helping appease investors seeking a moderate, and perceived market-friendly candidate, for the Democratic nomination.
Biden won nine states during the major primary night, including unexpected victories in Texas and Massachusetts. Bernie Sanders landed wins including California, a major source of delegates, as well as Colorado, Utah and Vermont, his home state.
“We believe financial markets would be comfortable with either President Trump or former Vice President Biden winning in November,” UBS Wealth Management’s Thomas McLoughlin and Brian Rose wrote in a note to clients. “Although Biden wants to raise the corporate tax rate, his proposals are not as aggressive as those promulgated by Senator Sanders.“
Democratic presidential candidate former Vice President Joe Biden speaks Wednesday, March 4, 2020, in Los Angeles. (AP Photo/Marcio Jose Sanchez)
Among the big winners in the market were healthcare stocks. Anthem (ANTM), Centene (CNC), Humana (HUM), Cigna (CI) and UnitedHealth (UNH) all surged by more than 10%.
“Sanders has frequently railed against the healthcare industry, and his ‘Medicare for All’ proposal would eliminate private health insurance,” the UBS analysts said. “By contrast, Biden favors building on the Affordable Care Act, which would likely benefit the industry.”
Still, some experts remain skeptical.
“[Biden] too poses a risk to corporate earnings, albeit a smaller one than progressive candidate Bernie Sanders,” Capital Economics’ Jonas Goltermann said.
“A key factor to watch, if Biden does consolidate his Super Tuesday gains and goes on to take the nomination, is the extent to which he can unify the Democratic party, especially the left-wing voters who now back Sanders,” he added. “Hillary Clinton’s failure to do so in 2016 was one reason she lost the general election (an estimated 10% of voters who backed Sanders in the primary then voted for Trump in November).”
4:00 PM ET: Dow advances 1,100 points after Democratic primaries
Stocks surged and the Dow ended more than 1,000 points higher in another volatile session for equities.
Health-care stocks led advances, after Joe Biden emerged the victor in a majority of states holding Democratic primaries during Super Tuesday. Biden’s victories in nine of 14 states put him ahead of Bernie Sanders in the delegate race to date, increasingly the likelihood that a more moderate and perceived market-friendly candidate would clinch the Democratic presidential nominee.
In the Dow, UnitedHealth Group outperformed, with the largest health insurer in the U.S. closing 10.7% higher and adding more than $20 billion to its market capitalization.
Here’s where the three major indices settled, as of 4:00 PM ET:
Crude oil (CL=F): $47.08 per barrel, -$0.10 or -0.21%
Gold (GC=F): $1,640.50 per ounce, -$3.90 or -0.24%
10-year Treasury (^TNX): yielding 1.013%, down 0.4 bps
—
2:00 p.m. ET: U.S. travel and tourism hit by coronavirus, Federal Reserve says in Beige Book
The Federal Reserve underscored the early impact of the coronavirus Wednesday in its Beige Book, a collection of anecdotes about economic conditions across the 12 regional Fed districts released ahead of scheduled policy-setting meetings.
“There were indications that the coronavirus was negatively impacting travel and tourism in the U.S.,” according to the Beige Book. “Manufacturing activity expanded in most parts of the country; however, some supply chain delays were reported as a result of the coronavirus and several Districts said that producers feared further disruptions in the coming weeks.”
Independent of the outbreak, the Fed highlighted the strength of the domestic labor market, noting that employment nationally “increased at a slight to moderate pace, overall, with hiring constrained by a tight labor market.”
Economic activity on the whole “expanded at a modest to moderate rate over the past several weeks,” according to the Beige Book.
The latest Beige Book was based on reports captured on or before February 24. The Fed’s next monetary policy meeting is scheduled for March 17 and 18.
—
1:43 p.m. ET: Stocks hit session highs
The three major indices hovered at session highs as investors digested the passage of an emergency funding bill for the coronavirus, the results of Super Tuesday and loosening monetary policy in the U.S. and now Canada.
Here were the main moves in markets, as of 1:43 p.m. ET:
Crude oil (CL=F): $47.33 per barrel, +0.15 or +0.32%
Gold (GC=F): $1,642.40 per ounce, -$2.00 or -0.12%
10-year Treasury (^TNX): yielding 0.976%, down 4.1 bps
—
12:50 p.m. Pathology and economy: Why you can’t ‘stimulate away’ the virus
Bank of America laid out its bear case for growth (and a bull case for gold) on Wednesday, citing why the market is less than convinced by the Fed’s surprise rate cut yesterday. Saying that “logistics is the key issue and difficult to stimulate away,” the bank had this to say:
“Some of China's recent activity data (e.g. vehicle sales) have been very weak, although we note early signs of normalization, including slight improvements of coal usage. That said, weak data from China's ports is a concern and highlights the impact recent disruptions have had on global supply chains. Indeed, as long as logistics (and staff attendance in factories) have not normalised, the multipliers of any fiscal and monetary support will likely remain low.
Capital Economics does expect a hit to global growth — but says the virus “is more likely to trigger a ‘run of the mill’ recession than another full-blown financial crisis.”
Safe-haven buying should keep bullion well supported, with BofA expecting the yellow metal to hit $1,700 per ounce by the fourth quarter. Gold (GC=F) was virtually flat around $1,644 per ounce.
__
12:30 p.m. DC agrees on nearly $8 billion emergency coronavirus package
Lawmakers have reached a settlement to fund a U.S. response to the coronavirus that’s worth over $8 billion. It underscores the grave threat posed by the virus, since Washington hasn’t found agreement on virtually anything — especially with the presidential election on the horizon.
Here’s where Wall Street was trading when the news broke:
Crude oil (CL=F): +2.42% or +$1.14 to $48.32 a barrel
Gold (GC=F): -0.21% or -$3.40 to $1,641.00 per ounce
10-year Treasury (^TNX): yielding 0.976%, down 4.1 bps
__
11:45 a.m. Stocks hold gains as LA declares emergency over new coronavirus cases
Wall Street is hanging on to the bulk of the session’s gains in late morning trading, as news comes that Los Angeles has declared a state of emergency after discovering six new coronavirus cases in the last 48 hours. While Wednesday’s gains are partly a relief rally over Joe Biden’s big Super Tuesday wins, market psychology is still being dictated by the disease — which may be on the cusp of being declared a pandemic.
—
10:12 a.m. ET: Michael Bloomberg ends Democratic campaign
Bloomberg spent hundreds of millions of dollars in a self-funded quest for the Democratic nod, but faltered badly in his strategy of picking up support during Super Tuesday — where a deep trove of Democratic delegates were ripe for the picking. Biden and progressive insurgent Bernie Sanders, who each picked up more than 300 delegates in Tuesday’s primaries, are now effectively locked in a two-way race.
—
10:02 a.m. ET: Bank of Canada cuts benchmark interest rate by a half percentage point, mirroring Fed move
The Bank of Canada slashed interest rates by 50 basis points in its regularly scheduled monetary policy meeting Wednesday, bringing the benchmark rate down to 1.25%.
Canadian stocks rose following the announcement, with the S&P/TSX Composite up about 1%. The rate cut had been mostly expected by market pundits after the U.S. Federal Reserve’s own move Tuesday to bring U.S. benchmark rates down by 50 basis points to a band of between 1.00% and 1.25%.
“The Bank continues to closely monitor economic and financial conditions, in coordination with other G7 central banks and fiscal authorities,” the Bank of Canada said in its statement Wednesday.
—
10:00 a.m. ET: ISM February non-manufacturing index tops expectations, hits one-year high
The Institute for Supply Management’s non-manufacturing index came in ahead of expectations for February, rising to 57.3 versus a print of 54.8 expected, according to Bloomberg data. This represented the highest level since February 2019.
The index in January had been 55.5. Readings above the neutral level of 50 indicate expansion in a sector.
—
9:45 a.m. ET: IHS Markit U.S. services PMI contracts for the first time in four years
The U.S. services sector contracted for the first time in four years, and at the fastest pace since October 2013, according to a IHS Markit’s final February services purchasing managers’ index (PMI) released Wednesday.
For February, the services PMI came in at 49.4, matching the advance print released several weeks ago. In January, the services PMI had been 53.4. Readings above the neutral level of 50 indicate expansion in as sector.
“Business sectors such as travel and tourism are reporting weakened activity due to the virus outbreak, most notably in terms of foreign visitors and overseas sales,” Chris Williamson, chief business economist at IHS Markit, said in a statement. “However, other sectors such as financial services and business services are reporting virus-related hits to demand, suggesting a more broad-based weakening of demand across the economy, exacerbating the supply-shock that is constraining manufacturing.”
—
9:37 a.m. ET: Stocks open higher, holding onto overnight gains
The three major indices extended gains from during the overnight session to open higher. Gains in the Dow were led by a more than 11% surge in shares of UnitedHealth Group. Peer health-care stocks Pfizer and Walgreens Boots Alliance also outperformed.
This came after Bernie Sanders lost footing to former Vice President Joe Biden in Democratic primaries held Tuesday, suggesting a candidate with less progressive policies affecting industries including health-care could clinch the Democratic presidential nomination. The Health-care sector also led gains in the S&P 500.
Here were the main moves in markets as of 9:37 a.m. ET:
S&P 500 (^GSPC): +1.73% or +51.98 points to 3,055.35
Nasdaq (^IXIC): +1.22% or +107.15 points to 8,791.24
Crude oil (CL=F): +2.42% or +$1.14 to $48.32 a barrel
Gold (GC=F): -0.21% or -$3.40 to $1,641.00 per ounce
10-year Treasury (^TNX): yielding 0.976%, down 4.1 bps
—
8:15 a.m. ET: U.S. economy adds 183,000 private payrolls in February, topping expectations, ADP reports
Private payrolls rose by a 183,000 in February, according to a monthly report from ADP/Moody’s. This beat expectations for a rise of 170,000, according to Bloomberg-compiled consensus data.
February’s payroll gains were again led by the service-providing sector, which added a net 172,000 positions. Education and health services industries added 46,000 payrolls, and leisure and hospitality industries added 44,000 payrolls.
Within the goods-producing sector, construction added 18,000 payrolls, while mining and manufacturing industries shed 3,000 and 4,000 roles, respectively.
For January, private payroll additions were downwardly revised to 209,000, from the gain of 291,000 previously reported.
—
7:48 a.m. ET: Stock futures jump after Tuesday’s rout
U.S. stock futures were higher Wednesday morning in the wake of the Federal Reserve’s emergency rate cut Tuesday morning, and after former Vice President Joe Biden staged a major comeback in voter support during Super Tuesday.
Dow futures were up more than 700 points just before 8 a.m. ET, extending a march higher throughout much of the overnight session. The 30-stock index had shed more than 900 points by market close Tuesday, after an unexpected inter-meeting interest rate cut from the Fed failed to imbue confidence with investors amid a still-escalating coronavirus outbreak.
Politics also remained a focal point, with major wins for Biden during Super Tuesday helping appease investors seeking a moderate, and perceived market-friendly candidate, for the Democratic nomination. Biden won nine states during the major primary night, including unexpected victories in Texas and Massachusetts. Bernie Sanders landed wins including California, a major source of delegates, as well as Colorado, Utah and Vermont, his home state.
Here were the main moves during the pre-market session, as of 7:48 a.m. ET:
S&P 500 futures (ES=F): 3,072.00, up 75 points or +2.5%
Dow futures (YM=F): 26,609.00, up 729 points or +2.82%
Nasdaq futures (NQ=F): 8,804.00, up 221.5 points or +2.58%
Crude oil (CL=F): $48.08 per barrel, up $0.90 or 1.91%
Gold (GC=F): $1,648.10 per ounce, up $3.70 or 0.23%
10-year Treasury (^TNX): yielding 1.01%, down 0.7 bps
NEW YORK, NEW YORK - MARCH 03: Traders work on the floor of the New York Stock Exchange (NYSE) on March 03, 2020 in New York City. Following a strong market surge yesterday, stocks one again fell on Wall Street as global concerns over the financial impact from the Coronavirus drive investments down. (Photo by Spencer Platt/Getty Images)
