The volatile US stock market rebounded Wednesday after Joe Biden racked up a string of surprise wins over Sen. Bernie Sanders in the Democratic primaries.
The Dow Jones industrial average climbed as much as 719.85 points, or 2.7 percent, in early trading, signaling a recovery from the shock of the Federal Reserve’s surprise interest rate cut on Tuesday. The S&P 500 and Nasdaq composite rose as much as 2.3 and 2 percent, respectively, after the opening bell.
Investors appeared encouraged by Biden’s Super Tuesday surge to the front of the Democratic presidential race ahead of Sanders, who has pledged to impose a wealth tax and create a single-payer health care system. Health care stocks spiked Wednesday as the prospects of Sanders’ “Medicare for All” proposal dimmed — UnitedHealth shares jumped more than 12 percent in early trading and CVS shares were up 5.7 percent as of 9:36 a.m.
The shifts in the 2020 race “should be mildly [market] positive, as Mr. Biden doesn’t terrify the top one percent and corporate America, nearly as much as Mr. Sanders,” Jeffrey Halley, senior currency analyst at OANDA, wrote in a Wednesday commentary.
Wall Street is also likely encouraged by the floundering campaign of Sen. Elizabeth Warren, who supports many of the same policies as Sanders but is viewed as having more expertise, according to Ritholtz Wealth Management CEO Josh Brown. Warren won no Super Tuesday contests and finished behind Biden in her home state of Massachusetts.
“Stocks will be even more relieved at Warren’s coming concession as they are at Biden’s big showing,” Brown said on Twitter.
The Dow plunged 786 points Tuesday as the Fed’s first emergency rate cut since 2008 failed to quell traders’ fears about the coronavirus weakening the world economy. The outbreak has killed more than 3,000 people — including at least nine in the US — and threatened to slash economic growth this year.
The stock markets have been volatile amid fears about the coronavirus spreading further outside China. The Dow gained nearly 1,300 points Monday, its biggest single-day point gain ever, after shedding more than 3,500 points in Wall Street’s worst week since 2008.
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