What coronavirus? US stocks open higher on Biden win

Wall Street opened higher on the heels of a sweeping victory for Joe Biden in the Super Tuesday Democratic primaries in the United States, shaking off a brutal Tuesday selloff that saw investors dump US stocks despite a surprise interest rate cut by the Federal Reserve.

The Dow Jones industrial vaulted more than 500 points at 1.9 percent at the start of trading in New York. The broader S&P 500 – seen as a proxy for retirement accounts in the US – spiked 1.5 percent at the open, while the Nasdaq jumped 1.3 percent.

Some analysts say the markets are taking heart from Biden’s return to front runner status over self-declared Democratic-Socialist Bernie Sanders.

“The markets will see Biden’s success as helping to eliminate what they see as the worst option, a Sanders presidency,” said Chris Nixon Cox, Chief Global Strategist at BrightSphere Investment Group.

Shares of health insurers UnitedHealth Group Inc, Centene Corp, Humana Inc and Cigna Corp were all trading higher having suffered in recent months as Sanders and his “Medicare for All” proposal, which would eliminate private health insurance altogether, gained supporters.

Adding to Wednesday’s upbeat mood, the ADP National Employment Report showed US private payrolls rose more than expected in February. The data is considered a precursor to the more comprehensive monthly US jobs report that will drop on Friday.

Wednesday’s bounce back extended the volatility that has gripped US and global equity markets in recent weeks.

After spiking higher on the heels of an emergency interest rate cut by the Federal Reserve on Tuesday, pessimism over rising coronavirus risks to the US and global economies gripped the markets in a volatile session that saw the Dow give up nearly 3 percent.

Not only did the Fed come through with a rate cut between scheduled meetings, something it has not done since 2008, it also produced the biggest one-off cut since the global financial crisis.

During a news conference following the rate cut, Federal Reserve Chairman Jerome Powell told reporters that the coronavirus outbreak and measures being taken to contain it “will surely weigh on economic activity both here and abroad for some time”, adding that “the magnitude and persistence of the overall effects on the economy, however, remain highly uncertain and the situation remains a fluid one.”

Mounting concerns about a global slide into recession, and a resulting collapse in corporate earnings this year, have knocked $3.1 trillion off the value of major US companies in the past 10 days.