United States stock markets were firmly in the green on Tuesday morning in New York, as oil prices bounced back and more countries and US states announced plans to ease coronavirus lockdowns to get battered economies back up and running again.
The Dow Jones Industrial Average was up 312 points or 1.32 percent in mid-morning trading in New York The S&P 500 – a gauge for the health of US retirement and college savings accounts – was 1.46 percent higher, while the tech-heavy Nasdaq Composite Index was 1.68 percent to the plus side.
Countries hit hard by the coronavirus pandemic, like Italy and Spain, and a number of US states are easing stay-at-home orders this week, boosting hopes that economic activity will start to recover, and in doing so, gin up demand for goods and services.
Basic Materials and energy stocks helped lead the charge higher on Wall Street with oil prices trending higher for a fifth consecutive day.
US benchmark West Texas Intermediate crude gained more than 17 percent to trade at $23.91 a barrel at mid-morning in New York, while global benchmark Brent crude was up more than 10 percent and trading above $30 a barrel.
Shares of Chevron Corp were up 3.3 percent while Exxon Mobil Corp was trading 1.69 percent higher in mid-morning New York trading.
Demand for commodities like oil and coal have plummeted as entire sectors of the US and global economies shut down in an effort to contain the spread of COVID-19.
Caroline Bain, chief commodities economist at Capital Economics, noted that prices of US benchmark oil could continue to be pressured by a lack of storage capacity as oil supply continues to far outweigh demand.
“A persistent lack of storage capacity means that another month or so of turbulence in the WTI price is likely,” Bain said in a note to clients on Monday. “By contrast, the Brent contract has the option for cash settlement so doesn’t suffer to the same extent from this problem. We expect oil prices to remain in the doldrums for much of this quarter – notwithstanding production cuts – as the market will remain oversupplied.”
Per Magnus Nysveen, Head of Analysis at Rystad Energy also noted the challenge posed by disappearing crude storage capacity in the US. “Think of it this way, if you’re a trader and open the window, do you see traffic? Is it noisy? That’s the indication that demand is coming back, that the price rebound is not too far away. Of course, what you can’t see from the window is the storage tanks filling up, but a market can’t only trade in negativity,” he said in a note to clients on Tuesday.
Airline shares were mixed on Wall Street with American and United Airlines to the plus side, and shares of Southwest Airlines and Delta dipping into negative territory in mid-morning trading on Wall Street.
On Monday, airline stocks were battered after Warren Buffett’s Berkshire Hathaway announced that it had sold off all of its airline holdings. All four major US airlines have reported unprecedented losses in the first quarter of 2020 as coronavirus restrictions and closed borders have obliterated the demand for travel.
Shares of drug giant Pfizer Inc drugmaker were trading up more than 2.5 percent after announcing it will work with its German partner to deliver doses of its experimental coronavirus vaccines for human testing in the US.