U.S. markets post big gains as Joe Biden’s Super Tuesday surge offers coronavirus respite

Yet on Wednesday, it became clearer that the former vice president had captured primary wins in 10 states, including Texas, a showing that propelled him to the front of the field. Sanders may score a big prize, California, where he is leading.

“Bernie Sanders’ socialist program includes lots of proposals to increase taxes and regulations, which would weigh on the economy and corporate earnings,” said Ed Yardeni, president of Yardeni Research. “The market’s sell-off last week on Sanders’ primary victories and rebound on Monday after Biden’s big win in South Carolina and this morning after Super Tuesday suggest that domestic U.S. politics may matter as much as the global health crisis to investors.”

The Dow Jones industrial average whooshed hundreds of points in the final minutes of the session, closing at 27,090, up 1,173 points on the day. The Standard & Poor’s 500 index finished up 4.22 percent while the tech-heavy Nasdaq closed with a 3.85 percent gain. Mike Bloomberg’s retreat from the Democratic presidential primary and a report showing unexpected growth in the U.S. service sector added to Wall Street’s feel-good vibe.

“Investors are shifting from the coronavirus to politics, and the market knows how to play politics better than the virus,” said Howard Silverblatt of S&P Dow Jones Indices. “But stocks could turn on a dime if there is a new memo on the coronavirus.”

Healthcare stocks roared nearly 6 percent, leading all 11 market sectors, in response to Biden’s performance. That eased the industry’s worries about Sanders and his Medicare-for-all plan. Cigna and UnitedHealth Group were up more than 10 percent in afternoon trading. Humana saw a 12.7 percent spike while Anthem closed in on nearly 14.4 percent. UnitedHealth, a Dow component and industry barometer, had its best day in a decade. Big Pharma also had a good day, with Pfizer and Johnson & Johnson flying 5 percent.

“Sanders’ win would be perceived as an increased risk for health insurers since he proposes a free comprehensive national health insurance program for all Americans, potentially leading to the elimination of the existing health insurance system,” said CFRA Research analyst Sel Hardy in a note published Wednesday. “Biden on the other hand, proposes a more moderate change to the private insurance system that will build on the Affordable Care Act, aiming to give more affordable choices on insurance plans, reducing health care costs, and making the health care system less complex.”

On Wednesday, the International Monetary Fund announced that it is proposing $50 billion in emergency funding to combat the coronavirus for low-income and emerging market countries. IMF managing director Kristalina Georgieva said the outbreak was a global problem “calling for a global response.”

The World Health Organization said Tuesday that covid-19, the disease caused by the virus, has killed about 3.4 percent of those diagnosed with the illness — a higher rate than estimated previously. On Wednesday, the number of new coronavirus deaths reported outside China exceeded those reported inside the country — the center of the outbreak — for the first time.

Markets had been rattled on Tuesday, as the yield on 10-year Treasury notes sank to an all-time low that day. Bonds are a safe haven for investors in times of turmoil, and bond yields decrease as bond prices increase. Gold, another safe haven, climbed 2.9 percent Tuesday and has continued to rise, now trading at $1,647 per ounce.

“The 10-year treasury is a great barometer to measure fear,” Wayne Wicker, chief investment officer at Vantagepoint Investment Advisers, wrote in commentary Wednesday. “With a closing yield Tuesday at an all-time low of less than 1%, markets are reflecting a heightened amount of uncertainty related to the coronavirus and macroeconomic implications.”

European markets mirrored U.S. optimism Wednesday, with the benchmark Stoxx 600 index, Germany’s DAX and France’s CAC 40 all up more than 1.4 percent in midday trading. Britain’s FTSE 100 climbed 1.6 percent. Asian markets closed to mixed results, with Hong Kong’s Hang Seng closing down 0.25 percent and Japan’s Nikkei 225 weakly positive.

Panic around the coronavirus’s presence in the United States has spiked as the death toll reached eleven late Wednesday, and new research revealed that the virus had probably been spreading undetected in California and Washington for weeks. Americans are beginning to face disruption to their work and travel, and the list of major events canceled in the face of the outbreak grows by the hour. Many grocery stores and pharmacies report being cleaned out of bottled water, disinfectant products and shelf-stable and frozen foods.

Investors are looking forward to ADP payroll numbers and fresh manufacturing data Tuesday to further suss out the damage the coronavirus has done to the global economy. Analysts are predicting global economic growth could slow to the lowest levels since the financial crisis this quarter.

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