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Stocks Climb as Some U.S. States Ease Lockdowns

By Anna Isaac, Joanne Chiu and Akane Otani 

U.S. stocks rose Tuesday, buoyed by optimism about the easing of restrictions on economic activity in parts of the U.S. and Europe.

The Dow Jones Industrial Average rose 338 points, or 1.4%, to 24087. The S&P 500 added 1.7% and the Nasdaq Composite advanced 1.8%.

California detailed initial steps to ease restrictions that have been in place for weeks to try to stop the spread of the coronavirus pandemic. Retailers including clothing stores, bookstores, sporting goods stores and florists can reopen for curbside pickup as soon as Friday, Gov. Gavin Newsom said. Other states including Florida also began allowing businesses to reopen or laid out plans to do so.

The moves give "investors more confidence that we're at the worst point in the downturn and that things should start to improve," said Lee Hardman, currency analyst at MUFG Bank.

Still, Mr. Hardman cautioned that a fresh surge in cases could derail investors' confidence and lead to a far more protracted economic recovery.

Other analysts said it would take some time to understand how effectively various countries are able to reopen businesses without risking a pickup in infections.

"May, June will be the turning point in terms of restarting global economic activity, and that's really what the market is looking at," said Stefan Hofer, chief investment strategist at LGT Bank Asia. "What we're all focusing on is the pace with which you have successful restarts of these economies and then also very important is that there's no second wave of Covid-19."

Among individual stocks, Starbucks jumped 2.6% after the coffee giant said it plans to reopen more than 85% of its U.S. company-operated stores by the end of this week.

DuPont shares climbed 1.8% after its earnings report pointed to higher demand for personal protective equipment as a result of the Covid-19 pandemic, but also to disrupted supply chains and weakness in other segments.

Online furniture retailer Wayfair and education technology firm Chegg climbed more than 20% apiece after their earnings reports. Both companies have seen a pickup in business as the pandemic has forced shoppers to turn from bricks-and-mortar stores to e-commerce and pushed students to take classes from home.

Elsewhere, the pan-continental Stoxx Europe 600 rose 2.1%, led higher by German and French stocks.

In Asia, Hong Kong's Hang Seng Index closed up 1.1%, while stock markets in mainland China, Japan and South Korea were closed for holidays.

Some investors remain skeptical of global markets' recent turnaround.

Stock valuations look expensive as "the world and the financial markets have not priced in a second wave" of infections, according to David Gaud, Asia chief investment officer and head of discretionary portfolio management at Pictet Wealth Management.

"There's no room for a relapse," he said, pointing to the potential for further earnings downgrades and selloffs in stocks if the pandemic revives. He said that meant markets would stay volatile.

Later Tuesday, major U.S. companies including Walt Disney are scheduled to report earnings. Disney has gained millions of subscribers for its new flagship streaming service with people being forced to stay home, but the shutdown of its production processes have hit its pipeline for new releases.

Write to Anna Isaac at anna.isaac@wsj.com, Joanne Chiu at joanne.chiu@wsj.com and Akane Otani at akane.otani@wsj.com

(END) Dow Jones Newswires

May 05, 2020 13:04 ET (17:04 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.