Canadian and U.S. main indexes gained on Tuesday as health care stocks rallied, oil prices surged and a number of countries and U.S. states eased coronavirus-induced restrictions in an attempt to revive their economies.
On the TSX, the Information Technology sector led the gains with a rise of 2.18%, thanks to Shopify climbing a further 4.12% to another record high. With a market cap of about C$113 billion, Shopify is quickly closing in on Royal Bank’s market value of $121 billion to become the biggest stock in Canada.
Stocks pulled back sharply late in the session after Federal Reserve Vice Chair Richard Clarida made downbeat comments about the depth of the economic contraction.
Some hard-hit countries, including Italy, as well some U.S. states including California are tentatively easing lockdown orders this week, raising hopes for a recovery in oil demand.
Health care shares led among S&P 500 sectors following developments in efforts to control the coronavirus from Pfizer and Regeneron Pharmaceuticals.
“We are starting to see some states open up, we are starting to see some activity,” said Paul Nolte, portfolio manager at Kingsview Investment Management. “We are probably now in the midst of the worst period and things will be gradually improving from here.”
The Dow Jones Industrial Average rose 133.33 points, or 0.56%, to 23,883.09, the S&P 500 gained 25.7 points, or 0.90%, to 2,868.44 and the Nasdaq Composite added 98.41 points, or 1.13%, to 8,809.12.
The S&P/TSX Composite Index rose 66.52 points, or 0.45%, at 14,811.56. Despite a big jump in U.S. crude oil futures, the TSX energy index rose just 0.17%. Financials was one of the few sectors seeing a decline, dropping 0.69%.
Shares of large tech and internet companies such as Microsoft and Apple also gained, giving lifts to the U.S. indexes.
Pfizer shares rose 2.4% after the drugmaker said it and its German partner had begun delivering doses of an experimental coronavirus vaccines for human testing. Regeneron Pharmaceuticals shares gained 6.0% after the company said its experimental antibody cocktail for COVID-19 may be available for use by the end of summer.
Stocks have rebounded sharply since late March from the coronavirus-fueled sell-off, helped by massive monetary and fiscal stimulus. Investors are now watching efforts by a number of states trying to spark their economies by easing restrictions put in place to fight the outbreak.
Clarida said during an interview with CNBC that the U.S. economy is likely to contract sharply during the second quarter as a result of intentional business shutdowns, but there is a chance the recovery could start in the second half of the year.
“Clarida threw a bit of a wet blanket on the market at the end of the session,” said Michael Antonelli, market strategist at Robert W. Baird in Milwaukee.
Data on Tuesday showed the vast U.S. services sector fell into contraction in April for the first time in nearly 10-1/2-years.
Investors are now bracing for data on the labor market through the week culminating with the U.S. and Canadian employment reports for the month of April due Friday.
“We have certainly gotten some negative data, but for the most part the market has learned to look through that,” said Kristina Hooper, chief global market strategist at Invesco.
In corporate news, shares of Norwegian Cruise Line Holdings Ltd tumbled 22.6% as the world’s third-largest cruise operator raised doubts about its ability to keep running as a business.
Oil prices soared on Tuesday, as some European and Asian countries along with several U.S. states began to ease coronavirus lockdown measures. The rally extended Brent crude’s gains to six straight days, while U.S. benchmark West Texas Intermediate has rallied for five consecutive sessions. Fuel demand worldwide was down roughly 30% in April, but demand is rising modestly due to efforts to lift travel restrictions.
International benchmark Brent crude was up $3.47, or 12.8%, to $30.67 a barrel by 2:11 p.m. EDT. U.S. West Texas Intermediate (WTI) crude futures gained $3.98, or 19.5%, to $24.37 a barrel.
Reuters, Globe staff
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