The stock market bounced back from its worst week in nearly two months Monday as optimism about a potential vaccine for the novel coronavirus and hopes for a U.S. economic recovery in the second half of the year put investors in a buying mood.
The S&P 500 climbed 3.2%, its best day since early April. The gains erased all of its losses from last week, when the index posted its worst showing since late March and its third weekly loss in the last four. Bond yields rose broadly in another sign that investors were becoming more optimistic.
Stocks were already headed for a higher opening on Wall Street when a drug company announced encouraging results in very early testing of an experimental coronavirus vaccine. The stock of the company, Massachusetts-based Moderna, jumped 20%.
Investors were also encouraged by remarks over the weekend from Federal Reserve Chair Jerome Powell, who expressed optimism that the U.S. economy could begin to recover in the second half of the year. Once the outbreak has been contained, he said, the economy should rebound “substantially.”
The S&P 500 gained 90.21 points, to 2,953.91. The benchmark index is still down 12.8% from its all-time high Feb. 19.
The Dow Jones Industrial Average climbed 911.95 points, or 3.9%, to 24,597.37. The Nasdaq composite rose 220.27 points, or 2.4%, to 9,234.83.
Small-company stocks fared better than the rest of the market. The Russell 2000 index picked up 76.70 points, or 6.1%, to 1,333.69.
Investors are hoping that a working vaccine can be developed and will help reassure people and businesses as the economy reopens.
“The question of how quickly people come back, or will they come back to the way they used to do things, that's much different if you have a vaccine,” said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors.
Traders are also encouraged there hasn't been a lot of data implying the reopening of the economy is going to lead to a resurgence in the number of COVID-19 cases, said Sam Stovall, chief investment strategist at CFRA.
“Of course, because we are responding to impressions, we could end up giving back some of these gains should additional information contest our beliefs,” he said.