United States stocks benefited from a triple boost on Tuesday. Oil prices rose, states eased stay-at-home orders to help revive local economies stung by coronavirus lockdowns, and hopes a coronavirus drug could soon be widely available all lifted investor sentiment.
The Dow Jones Industrial Average rose 0.56 percent higher to close at 23,883.09. The S&P 500 – a widely used gauge of US retirement and education savings accounts – gained 0.90 percent. The tech-heavy Nasdaq Composite Index ended 1.31 percent higher.
Some hard-hit countries, including Italy, as well as some US states, including California, are tentatively easing lockdown orders this week.
While social-distancing measures are being gradually lifted, Oren Klachkin, the lead US economist at Oxford Economics, warns “Significantly weaker demand, supply chain disruptions, tighter financial conditions, and uncertainty over the virus’s trajectory will pose considerable headwinds to an economic rebound.”
The easing of stay-at-home orders also raised the prospect that more people will want to get on the road, thus increasing demand for oil. West Texas Intermediate (WTI) oil futures soared 20 percent in New York on Tuesday, closing above $24 a barrel. Brent crude topped $30 a barrel.
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.”
News that Regeneron Pharmaceuticals and Pfizer are making progress in the development of a drug and a vaccine to control the spread of coronavirus lifted healthcare shares.
Pfizer gained 2.4 percent. Regeneron Pharmaceuticals gained 6.01 percent.
Shares of large tech and internet companies such as Microsoft and Apple also gained.
Additional reporting by Radmilla Suleymanova.