(May 28): U.S. stocks rose on Wednesday, with the S&P 500 closing above 3,000 for the first time since March 5, as the further easing of lockdowns lifted optimism for an economic recovery.
Bank stocks powered the day's advance, with the S&P 500 financial index leading gains among major sectors. The index rose nearly 10% over the past two sessions for its biggest two-day increase since April 8-9.
JPMorgan Chase & Co was the leading point gainer in the financial index, rising 5.8% as the stock surged for a second day in a row. The bank's chief executive, Jamie Dimon, said Tuesday he expects JPMorgan will boost its credit reserves again in the second quarter, but said there are signs the economy is regaining its footing.
After-the-bell on Wednesday, the head of JPMorgan's corporate and investment banking division said second-quarter revenues are on track to be more than 50% higher than the same period last year.
Continued easing of lockdowns, optimism about an eventual COVID-19 vaccine and massive U.S. stimulus have been driving the market's recent gains. On Wednesday, Walt Disney Co announced plans to begin reopening its Walt Disney World resort in Florida, the world's largest theme park, in phases beginning July 11, and MGM Resorts said it would reopen its four Las Vegas casinos on June 4.
"It's all about liquidity and the hopes that the economy will eventually do well," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
"The rally will continue, but I don't think it will continue without pullbacks," he said, noting that weak second-quarter earnings could give investors a "reality check."
Tech-related shares underperformed the broader market on Wednesday after leading the recent rally.
The Dow Jones Industrial Average rose 553.16 points, or 2.21%, to 25,548.27, the S&P 500 gained 44.36 points, or 1.48%, to 3,036.13, and the Nasdaq Composite added 72.14 points, or 0.77%, to 9,412.36.
Amid the recent gains, U.S. tensions with China have cast a cloud on markets.
President Donald Trump said Tuesday that Washington would announce its response to China's planned national security legislation on Hong Kong before the end of the week. Secretary of State Mike Pompeo said Wednesday that Hong Kong no longer warrants special treatment under U.S. law as it did when it was under British rule, potentially a big blow to its status as a major financial hub.
Tech-related shares are among the most sensitive to Chinese growth, said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute in St. Louis.
"If the market is going to go higher from here, you're going to have to have broader participation, but you are going to need those large-cap tech companies to be along for the ride because they make up such a large portion of the benchmark," Samana said.
Also on Wednesday, the Federal Reserve's Beige Book report showed that U.S. businesses continued to be hammered by the effects of the novel coronavirus epidemic into the middle of May.
Advancing issues outnumbered declining ones on the NYSE by a 3.81-to-1 ratio; on Nasdaq, a 2.21-to-1 ratio favored advancers.
The S&P 500 posted seven new 52-week highs and no new lows; the Nasdaq Composite recorded 41 new highs and 10 new lows.
Volume on U.S. exchanges was 12.86 billion shares, compared to the 11.33 billion average for the full session over the last 20 trading days.