Portfolio

US open: Mixed start to trading as trade fears somewhat dampen vaccine optimism

By Iain Gilbert

Date: Wednesday 27 May 2020

US open: Mixed start to trading as trade fears somewhat dampen vaccine optimism

(Sharecast News) - US stocks opened mixed on Wednesday as optimism regarding the reopening of the economy and a potential Covid-19 vaccine offset fears around a heightening of tensions between the world's two largest economies.

As of 1530 BST, the Dow Jones Industrial Average was up 1.02% at 25,251.18 and the S&P 500 was 0.27% firmer at 2,999.76, while the Nasdaq Composite was 0.81% weaker at 9,264.31 as a decline in tech shares hit the index.

The Dow opened 256.07 points higher on Wednesday, following on from gains seen in the previous session as investors returned from the Memorial Day long weekend to news that pharmaceuticals firm Novavax had begun trials on a Covid-19 vaccine in Australia.

While vaccine hopes drove yesterday's rally, news that the White House was considering sanctions on Chinese firms and officials due to the nation's new laws granting it executive powers in autonomous Hong Kong knocked stocks off their session highs. Donald Trump also vowed to provide an update on the government's response to the matter by the end of the week.

However, the memories of market participants seemed to be short in some regards, with shares in the likes of cruise operator Carnival and carrier United Airlines jumping 5.10% and 3.17% shortly after the bell, respectively, as investors continued to monitor the reopening of the US economy, with all 50 states going back to work to a certain extent.

On the corporate front, shares in Goldman Sachs, American Express and JP Morgan Chase were all up more than 4% at the bell, while trade bellwether Caterpillar and Raytheon Technologies were both up more than 3% after the open.

In data news, US applications for home mortgages increased for a sixth straight week last week, indicating that the housing market could lead the economy's recovery.

The Mortgage Bankers Association said on Wednesday that its seasonally adjusted Purchase Index had increased 8.6% week-on-week, while on an unadjusted basis, the index rose 7.4% from the prior week and was 9% higher year-on-year.

Still to come, the Federal Reserve's beige book will be released at 1900 BST, while Fed head James Bullard will deliver a speech at 1730 BST.

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