Stocks rose sharply to start the week Monday as Wall Street cheered news on Boeing and traders shrugged off the latest surge in coronavirus cases.
The Dow Jones Industrial Average closed 580.25 points higher, or 2.3%, at 25,595.80. It was the Dow’s best day since June 5, when it soared more than 3%. The S&P 500 jumped 1.5% to 3,053.24 while the Nasdaq Composite gained 1.2% to end the day at 9,874.15.
The major averages hit their session highs just minutes ahead of the close. That late-day surge put the S&P 500 in positive territory for the month with one trading day left.
Shares of Dow-member Boeing rose 14.4% as certification flights for the Boeing 737 Max began Monday. The test is seen by investors as a critical step in Boeing’s worst-ever corporate crisis, which began in March 2019 after two crashes in five months killed 346 people.
Apple was also among the biggest contributors of gains on the Dow, climbing 2.3%. Facebook, meanwhile, closed 2.1% higher to recover from an earlier decline. The social media giant was first under pressure after more companies said they will pause advertising on its platforms. Since Friday, Starbucks, Coca-Cola and Guinness-parent Diageo all announced they will halt advertising on social media.
Investors bet on select stocks on hopes most state economies will continue to reopen even as some hotspots pop up. Southwest Airlines jumped 9.6% after Goldman Sachs upgraded the shares to buy from sell. Shares of retailer Gap and Kohl’s rose 3.7% and 10.1%, respectively.
The major averages also got a boost after the National Association of Realtors said pending home sales jumped by a record 44.3% in May.
Monday’s sharp gains came even after data compiled by Johns Hopkins University showed more than 2.5 million Covid-19 cases have been confirmed in the U.S., along with more than 125,000 deaths. Globally, over 10 million cases have been reported.
“US coronavirus statistics worsened over the weekend … but traders ultimately faded this negativity yet again,” said Erik Bregar, head of FX strategy at the Exchange Bank of Canada, in a note.
In Florida alone, 5,409 cases were confirmed Sunday. However, that’s down from a total of 8,424 cases confirmed on Saturday. To be sure, the percentage of positive tests has risen to 13.67% from 12.21%.
Some, such as Tom Lee of Fundstrat Global Advisors, say they’re taking solace in the fact that the acceleration in infection numbers is not yet leading to a marked rise in fatalities.
“While there were many alarming COVID-19 ‘headlines’ over the weekend, noting ‘record case’ numbers, daily US deaths attributed to COVID-19 fell to a new low of 253,” Lee said in an email to clients.
“And while many are inclined to become ‘full blown’ bearish again, we think the divergence in healthcare in COVID-19 (cases vs deaths) and the trajectories mirroring NYC near its peak tells us” we may be close to the point when cases begin to slow, he added.
The major averages posted their second weekly declines in three weeks on Friday. The Dow dropped 3.3% last week while the S&P 500 lost 2.9%. The Nasdaq Composite fell 1.9% last week.
“The bearish argument for the current market is breadth has not strengthened during this period of consolidation,” said Andrew Thrasher, founder of Thrasher Analytics, in a note. “That’s discouraging as more stocks have broken down along with the index.”
Thrasher noted 3,150 will be a key level to watch for investors. “I’m less interested in risky assets until we get back to that level,” he said.