Wall Street rallies; S&P 500 posts strongest one-day rise since June

THE S&P 500 surged on Monday in its strongest one-day gain since June as bond markets calmed after a month-long sell-off, while another COVID-19 vaccine getting US approval and fiscal stimulus bolstered expectations of a swift economic recovery.

Johnson & Johnson ended up 0.5% but off earlier highs as it began shipping its single-dose vaccine after it became the third authorized COVID-19 vaccine in the US over the weekend.

The Dow Jones Industrial Average surged 1.95% to end at 31,535.51 points, while the S&P 500 gained 2.38% to 3,901.82. The Nasdaq Composite jumped 3.01% to 13,588.83.

President Joe Biden scored his first legislative win as the House of Representatives passed his US$1.9 tril coronavirus relief package early Saturday. The bill now moves to the Senate.

US bond yields eased after a swift rise last month on expectations of accelerated inflation due to bets on an economic rebound. The US 10-year treasury yield dipped to 1.449% after hitting a one-year high of 1.614%.

“The sentiment is risk-on with more investors showing interest towards cyclical stocks while a positive vaccination drive and better macro numbers are hinting towards a better growth environment,” said Keith Buchanan, portfolio manager at Globalt in Atlanta.

Data showed US manufacturing activity increased to a three-year high in February amid an acceleration in new orders.

All 11 S&P 500 sectors rallied, led by financials and technology.

Apple Inc, Microsoft Corp, Facebook Inc and Amazon.com Inc bounced back after a sell-off last week in tech stocks. Apple rose over 5% and was the strongest contributor to the S&P 500’s gains.

The S&P 500’s rebound from its 50-day moving average, touched after Friday’s decline, is a bullish sign that is adding to investors’ enthusiasm, said CFRA Research Chief Investment Strategist Sam Stovall.

“It’s a positive signal, at least in the near term, that the recent weakness has dissipated,” Stovall said.

The Russell 2000 index of smaller companies surged 3.37%, putting its gain in 2021 at over 15%, compared with the S&P 500’s gain of about 4% in the same period.

Warren Buffett’s enthusiasm for the future of the United States and his company Berkshire Hathaway Inc has not been dimmed by the coronavirus pandemic, according to his annual letter to investors. Berkshire’s shares rallied 3.6%.

Advancing issues outnumbered declining ones on the NYSE by a 3.81-to-1 ratio; on Nasdaq, a 4.29-to-1 ratio favoUred advancers.

The S&P 500 posted 48 new 52-week highs and no new lows; the Nasdaq Composite recorded 197 new highs and 17 new lows.

Volume on US exchanges was 12.1 billion shares compared with the 15.1 billion average for the full session over the last 20 trading days. – March 2, 2021

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