Stocks Rally on U.S. Virus Spending, Stimulus Bets: Markets Wrap

(Bloomberg) -- U.S. stocks surged to the second 4% rally in three days after Congress authorized nearly $8 billion for virus prevention and investors warmed to Joe Biden’s ascendant candidacy. Treasuries fell for just the second time in 10 days.

The S&P 500 surged into the close, nearly matching Monday’s rally that was the best in 14 months. Health-care firms led the spike, rising the most since November 2008 as the weak performance in Tuesday’s primaries by Bernie Sanders dented the threat of policies that would upend the industry.

“It looks like a combination of two things: Biden’s showing on Super Tuesday is really an unexpected surprise, a positive surprise to the markets because markets always prefer a more moderate centrist Democratic nominee,” Deepak Puri, Americas CIO at Deutsche Bank Wealth Management, said by phone. “The other is the G-7 coordinated fiscal and monetary policy easing, which is on top of the 50 basis-point rate cut by the Fed announced yesterday.”

Stocks opened higher on speculation other central banks and governments would provide stimulus as the outbreak claimed more lives and new cases piled up. New York reported five new cases Wednesdsay and California had its first related death. The S&P 500 has now surged more than 6% this week, a rebound that began Friday when the Fed pledged support. The S&P 500 is still more than than 7% below its February record.

Ten-year Treasury yields pushed back above 1%, while two-year dropped to 0.66%. The low rates also helped breath new life into corporate bond deals after a days-long hiatus.

Investors are anxious for promised action by the Group of Seven to confront the virus while they’re buying risk assets on dips and watching the world’s biggest bond market move closer to negative yields. The Democratic contest posed a fresh challenge to Trump as nine states went to Biden, who’s positioned as a moderate against a more progressive Sanders in the race for the party’s nomination to take on Trump in November.

These are the main moves in markets:

Stocks

• The S&P 500 Index advanced 4.2% as of 4 p.m. New York time.
• The Dow Jones Industrial Average gained 4.5%.
• The Stoxx Europe 600 Index rose 1.4%.
• The U.K.’s FTSE 100 Index added 1.5%.
• The MSCI Asia Pacific Index climbed 0.4%.

Currencies

• The Bloomberg Dollar Spot Index increased 0.2%.
• The euro decreased 0.6%.
• The British pound rose 0.1%.
• The Japanese yen weakened 0.2%.

Bonds

• The yield on 10-year Treasuries rose three basis points to 1.03%.
• The yield on two-year Treasuries fell three basis points to 0.67%.
• Germany’s 10-year yield fell one basis point to -0.63%.

Commodities

• West Texas Intermediate crude fell 0.2% at $47.07 a barrel.
• Gold fell 0.2% to $1,637.47 an ounce.

--With assistance from Elena Popina, Katherine Greifeld, Nancy Moran, Todd White and Vildana Hajric.

To contact the reporters on this story: Randall Jensen in New York at rjensen18@bloomberg.net;Claire Ballentine in New York at cballentine@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Robert Brand

©2020 Bloomberg L.P.