What’s happening: US stocks closed sharply higher on Wednesday, putting an end to the downturn over the last three trading sessions.
What happened: After notching a record high last week, the Nasdaq 100 entered correction territory on Tuesday, at the fastest pace in the history of the index.
Investors shrugged off AstraZeneca’s disappointing update on its covid-19 vaccine candidate to focus on tech stocks, which have been the main beneficiaries of the virus outbreak. The rise in tech behemoths from early in the session helped the tech-laden Nasdaq 100 to book its largest gain since April 29.
Why it matters: The day began with a rally in the shares of Apple and Microsoft, which had come under pressure after analyst reports suggested that these stocks were grossly overvalued.
After nosediving over the last three trading sessions, tech stocks gained on Wednesday on expectations of the work- and learn-from-home trends continuing for longer. The tech rally fueled a market-wide rebound.
Even then, markets have been anxiously waiting for the launch of a covid-19 vaccine. Amid this, AstraZeneca said it will need to pause the late-stage study for its vaccine candidate as one of the participants was diagnosed with an unexplained illness. The drug-maker announced that an independent committee will review the safety data. Although AstraZeneca termed this as “routine action,” the delay and a possible termination of the study caused investor concern, as confirmed cases rose past 28 million, with the death toll exceeding 900,000.
Investor sentiment was lifted by the Labor Department reporting an increase in job openings, with 6.6 million openings in July.
Tesla’s stock jumped 11% on Wednesday after booking the biggest single session decline the previous day. Shares of Apple, Microsoft, and Amazon rose around 4%.
The Dow Jones added 439.58 points to close at 27,940.47 on Wednesday, while the S&P 500 rose 2% to 3,398.96. The Nasdaq 100 climbed 2.7% to settle at 11,141.56, after recording a pullback of more than 10% over the last three sessions.
What to watch: Traders await data on initial jobless claims, producer prices and wholesale inventories from the US. The number of persons filing for jobless benefits is expected to decline to 846,000 in the latest week, from 881,000 in the week ending August 29. Analysts expect producer prices to rise 0.2% in August, versus a 0.6% improvement in July. Wholesale inventories are projected to decline 0.1% in July.
Some profit-taking by investors after yesterday’s rally could exert pressure on US stocks today. US stock futures were trading lower in the Asian session, signaling a lower start on Wall Street.
Investors will continue to monitor covid-19 cases. Despite some decline in daily cases in the US, the pandemic continues to be the main concern for investors.