S&P 500 drifts higher on healthcare, tech lift

By Reuters Last updated May 28, 2020

Traders wearing masks work, on the first day of in person trading since the closure during the outbreak of the coronavirus disease (COVID-19) on the floor at the New York Stock Exchange (NYSE) in New York, U.S., May 26, 2020. REUTERS/Brendan McDermid

By Medha Singh

(Reuters) – Wall Street’s major indexes rose on Thursday, boosted by gains in healthcare and technology stocks, as investors hoped for a swift economic recovery from a coronavirus-driven economic slump.

Boeing (NYSE:BA) Co climbed 3.3%, the most among the 30 blue-chip Dow components, as the planemaker said it had resumed production of its 737 MAX passenger jet at its Washington plant, although at a “low rate”.

Healthcare and technology sectors rose 2% and 1%, respectively, topping the major S&P sectors trading higher.

The S&P 500 has soared about 38% from its low hit in March as a restart in business activity after weeks of shutdown and massive amounts of stimulus measures to support the economy drove hopes of a recovery.

The benchmark index is now about 10% below its Feb 19 record high.

“People have a lot of hope that the economy will spring back to life pretty quickly,” JJ Kinahan, chief market strategist at TD Ameritrade (NASDAQ:AMTD) in Chicago, said, while adding that there was nervousness about reality keeping up with optimism.

Worsening ties between Washington and Beijing over the handling of the coronavirus outbreak and a new national security law in Hong Kong pose a major threat to the stock market’s strong recovery from the crash earlier this year.

President Donald Trump has promised action over Hong Kong by the end of the week.

“I would prefer that the market not go up quite as fast because the sharper it moves higher, the more vulnerable it becomes to a pullback,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab (NYSE:SCHW) in Austin, Texas.

Meanwhile, the number of Americans filing for unemployment benefits held above 2 million for a 10th straight week, while a separate report showed GDP contracted at a bigger-than-expected 5% annualized rate in the first quarter, the deepest drop in output since the 2007-09 Great Recession.

At 11:19 a.m. ET, the Dow Jones Industrial Average was up 109.08 points, or 0.43%, at 25,657.35, the S&P 500 was up 15.10 points, or 0.50%, at 3,051.23. The Nasdaq Composite was up 48.48 points, or 0.52%, at 9,460.84.

Bank stocks lagged after surging about 15% in the past two sessions.

Memory chipmaker Micron Technology Inc (NASDAQ:MU) dropped 3%, despite raising its revenue forecast for the third quarter.

Twitter fell 2.2% and Facebook (NASDAQ:FB) slipped 0.4% ahead of an expected order from Trump that would review a law that has long protected the companies from being responsible for the material posted by their users.

Advancing issues outnumbered decliners by a 1.49-to-1 ratio on the NYSE and by a 1.38-to-1 ratio on the Nasdaq.

The S&P index recorded 14 new 52-week highs and no new lows, while the Nasdaq recorded 50 new highs and six new lows.