Stocks rose broadly on Monday as traders grew more optimistic about the prospects of an economic recovery while states continue to reopen.
The Dow Jones Industrial Average traded 304 points higher, or 1.1%. The S&P 500 climbed 0.7%. The Nasdaq Composite was up 0.7% and hit a fresh record high. The S&P 500 is down just 0.4% for the year. At one point this year, the broader market index was down 30%.
“What is clearly happening is the excitement of reopening is allowing a lot of these companies that have been casualties of Covid to come back and come back in force, ” said Stanley Druckenmiller, chairman and CEO of the Duquesne Family Office, on CNBC’s “Squawk Box.” “With a combination of the Fed money and, in particular, a vaccine where the news has been very, very good.”
“Well I’ve been humbled many times in my career, and I’m sure I’ll be many times in the future. And the last three weeks certainly fits that category,” added the legendary hedge fund manager, who admitted he missed the comeback because he underestimated the Federal Reserve.
Stocks tied to the reopening of the economy led the gains once again. Airlines, retailers and cruise lines were higher. United was up 9.7%. Kohl’s added 5.8%. Shares of Carnival Corp. were up more than 12.4%.
Stay-at-home winners such as Netflix and Microsoft both lagged the broader market. Netflix dropped more than 0.4% while Microsoft traded just 0.3% higher.
Wall Street was also riding high on the back of a surprise surge in U.S. employment. The Labor Department said Friday the economy added 2.5 million jobs in May, a record. Economists polled by Dow Jones had forecast a drop of more than 8 million.
“The 2.5 million rebound in employment last month reverses only a small fraction of the jobs lost since February,” said Michael Pearce, senior U.S. economist at Capital Economics. “But considering we and the consensus had been braced for another large decline, it builds on the signs from some of the other macro data this week that economic activity is rebounding faster and more vigorously than we had anticipated.”
Friday’s strong jobs report led the major averages to sharp weekly gains.
The Dow surged 6.8% last week while the S&P 500 jumped 4.9%. The Nasdaq Composite climbed 3.4%. The tech-heavy Nasdaq was the first of the three major indexes to trade back at all-time highs since the coronavirus pandemic shuttered the global economy.
“The stock market is almost looking past Covid and looking forward to the reopening,” said Ryan Detrick, senior market strategist at LPL Financial. “The concerns of another Covid outbreak are real, but the stock market is clearly saying it is much more in tune with the opening of the economy.”
Detrick warned, however, “the market is ripe for a well-deserved break” after its blistering rally off the March lows.
Since March 23, the S&P 500 has rallied more than 46 while the Dow has gained over 50%. Those gains come in large part from expectations of a swift economic recovery.
“It appears that the most rapid bear market in history has been followed by the most dramatic recovery in history,” wrote Marc Chaikin, CEO of Chaikin Analytics. “While COVID-19 cases are still growing in certain states, particularly outside of densely populated urban areas, investors see the glass as half-full and are looking ahead 12-18 months.”
Data compiled by OpenTable shows restaurant bookings across the U.S. are now 80% below last year’s levels. In April, bookings were down 100%. Hotel occupancy rates, home purchases and U.S. air travel have also started to increase.
Investors will be concentrating on the Federal Reserve’s statement on interest rates Wednesday and a press conference from Chairman Jerome Powell. The Fed is expected to reiterate its commitment to unlimited asset purchases to keep markets functioning.
Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.
Stocks rose broadly on Monday as traders grew more optimistic about the prospects of an economic recovery while states continue to reopen.