Stocks - Wall Street Solidly Higher on Optimism of Covid-19 Containment

By Geoffrey Smith 

Investing.com -- U.S. stock markets extended Monday’s blistering rally in morning trading Tuesday, on hopes that the Covid-19 pandemic will peak soon, allowing at least a partial lifting of lockdown restrictions on the economy before long.

At 11:25 AM ET (1525 GMT) the Dow Jones Industrial Average rose 460, up 2% from Monday’s close. The S&P 500 was up 1.8%, while the NASDAQ Composite lagged with a gain of only 1%.

Although off their early highs, the indices received a late-morning boost on news that admissions to intensive care units were down significantly in New York state.

All three indices had gained more than 7% on Monday as reports emerged of a new package of economic support measures being prepared in Washington. House Speaker Nancy Pelosi said the measures could be worth over $1 trillion.

The extravagant rebound over the last 24 hours means that the market is already nearly back at its likely year-end value, by some analysts' estimates.

DWS, the asset management arm of Deutsche Bank (DE:DBKGn), assumes an end-2020 level of 2,750 for the S&P 500, only 9 points above its current level. That’s on the assumption that major U.S. and European cities won’t be locked down for more than 60 days, “followed by many month of residual demand and supply-side damage from late 2019 activity levels,” according to David Bianco, DWS’s U.S. head of active equities.

“A shorter or longer lockdown would lead to some upside or downside to this base-case scenario,” he added in e-mailed comments.

Among individual stocks, Exxon Mobil  (NYSE:XOM) stock rose 5% after the company said it will cut capital spending by some 30% from the originally budgeted $33 billion, concentrating most of the cuts in its short-cycle shale properties in the Permian Basin in Texas. Independent shale producer Continental Resources Inc (NYSE:CLR) stock rose 13% after also announcing it will cut production by 30% this year and suspend its dividend to conserve cash.

Such guidance, which all-but locks in a lower production trajectory for the U.S. this year, will make it easier for rival producers led by Saudi Arabia and Russia to cobble together an agreement to cut more of their own output and stabilize global prices. U.S. crude futures were 0.9% higher at $26.32 a barrel as of 11:25 AM ET.

Elsewhere, 3M  (NYSE:MMM) stock rose 4.5% - also hitting a four-week high - after President Donald Trump announced an end to their public spat over producing face masks for U.S. health care workers. The two have agreed that 3M will supply 166 million masks over the next three months.

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Elsewhere, Zoom Video (NASDAQ:ZM) stock fell 8% and biotech giant Gilead Sciences (NASDAQ:GILD) stock fell 5%, as two of the stocks that have benefited from inflows from the rest of the market in recent weeks reversed. Zoom Video has ridden a boom in working from home in Europe and the U.S., while Gilead's experimental anti-retroviral drug remdesivir has been touted as one of the most likely sources of a breakthrough in treating the Covid-19 disease.