S&P 500 wipes out 2020 drop on reopening optimism
U.S. stocks climbed, with the S&P 500 erasing its losses for 2020, as easing lockdowns bolstered economic optimism. The dollar fell.
The equity benchmark extended a rally from this year’s lows to more than 40%, rising to a 15-week high. Occidental Petroleum surged after Bloomberg News reported the company is reviewing options for its Middle Eastern assets. The Nasdaq 100 rose to a record high, and Boeing led gains in the Dow Jones. The dollar had its longest slide in almost a decade, while Treasuries advanced. Oil sank after Saudi Arabia said it wouldn’t continue its additional, deeper output curbs after June.
Traders pushed up the value of U.S. equities as many parts of the country came out of the shutdowns that brought the world’s largest economy to a standstill. To Citigroup’s strategists including Tobias Levkovich, positioning may be overly extended, and investors may not be factoring all the potential risks. Meanwhile, Stan Druckenmiller — who last month warned about owning stocks — said on Monday that he now believes he was “far too cautious” during the current market rally.
“As long as the data is improving and the market has the tailwind of liquidity at it’s back, it’s probably going to continue to rise,” said Ed Campbell, portfolio manager and managing director at QMA. “I wouldn’t be betting against equities at this point.”
The dollar fell for an eighth straight day, down to the level before the coronavirus crisis sparked a rush to haven assets. Where it goes from here mostly depends on the Federal Reserve, which will probably welcome all signs of recovery in its statement at the conclusion of this week’s meeting. But policy makers may be wary of an unruly increase in borrowing costs that could add to strains on businesses and households, and raise the price tag of the government’s rescue efforts.
--With assistance from Cormac Mullen, Masaki Kondo, Todd White, Lynn Thomasson, Sophie Caronello and Nancy Moran.