NEW YORK (Reuters) – Wall Street roared back to life on Wednesday, with both the Dow and the S&P 500 surging more than 4%, after former Vice President Joe Biden’s strong showing in the Super Tuesday Democratic primary contests injected a dose of confidence.
Biden’s pack-leading results – on course to win in 10 of the 14 states that held primaries on Tuesday – powered a jump in healthcare stocks, and upbeat economic data soothed worries about the impact of the spreading coronavirus outbreak.
After the S&P 500 reached an all-time high on Feb. 19, the stock market slid into a correction as the rapidly spreading COVID-19 sparked recession fears.
The S&P 500 has recovered nearly 6% from Friday’s closing trough, but remains about 7.6% below the all-time high reached on Feb 19.
The S&P 500 healthcare index .SPXHC had its best day since November 2008, advancing 5.8%. Health insurers, in particular, gained ground, with the S&P 500 Managed Care index .SPLRCHMO jumping 12.4%.
Biden emerged as the front-runner in a narrowing race for the Democratic presidential nomination following a string of primary victories, providing relief to market participants who are wary of the more progressive policy positions of rival Bernie Sanders, a self-described democratic socialist. Sanders’ embrace of a Medicare for All healthcare policy that would essentially abolish private insurance had cast a shadow on healthcare stocks.
“It’s a relief to the market that it appears that Joe Biden is increasingly likely to get the Democratic nomination,” said Oliver Pursche, vice chairman and chief market strategist at Bruderman Asset Management in New York.
“Many Americans, even those inclined to agree with Trump’s policies, are clamoring for a unifying voice,” Pursche added. “And Joe Biden is about as benign as anyone can be.”
Biden’s showing acted at a balm to investors day after the market slumped following the U.S. Federal Reserve’s emergency 50-basis-point interest rate cut to head off potential economic damage from the coronavirus outbreak. There are now 93,000 confirmed coronavirus cases worldwide.
“(The Fed’s rate cut) coming two weeks before a policy meeting signals a certain level of panic,” said Pursche. “We’re all worried about the coronavirus and the economic impact but so far the data has held up.”
Indeed, separate data released on Wednesday showed stronger-than-expected private sector hiring, while the services sector expanded at its fastest pace in a year.
Additionally, the Mortgage Bankers Association reported that the average 30-year fixed contract mortgage rate fell last week to a seven-year low.
The Dow Jones Industrial Average .DJI rose 1,173.45 points, or 4.53%, to 27,090.86, the S&P 500 .SPX gained 126.75 points, or 4.22%, to 3,130.12 and the Nasdaq Composite .IXIC added 334.00 points, or 3.85%, to 9,018.09.
All of the 11 major sectors in the S&P 500 posted solid advances, led by healthcare and utilities .SPLRCU.
Dollar Tree Inc (DLTR.O) forecast underwhelming first-quarter sales and profit, sending the discount retailer’s shares down 3.6%.
Abercrombie & Fitch Co (ANF.N) jumped 9.0% after beating quarterly sales and profit estimates.
Campbell Soup Co’s (CPB.N) beat-and-raise earnings report gave a 10.1% boost to its shares.
Advancing issues outnumbered declining ones on the NYSE by a 5.34-to-1 ratio; on Nasdaq, a 3.64-to-1 ratio favored advancers.
The S&P 500 posted eight new 52-week highs and 31 new lows; the Nasdaq Composite recorded 37 new highs and 130 new lows.
Volume on U.S. exchanges was 11.04 billion shares, compared with the 10.00 billion average over the last 20 trading days.
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