Sunday, June 13

U.S. Stocks Rise on Signs of Muted Political Risk


The S&P 500 rose 1.0%, signaling that the broad market gauge may follow up on gains from early last week. The Nasdaq Composite Index climbed 1.4%, while the Dow Jones Industrial Average added 243 points, or 0.9%.

Uncertainty over the leadership of the U.S. government rattled markets late last week after Mr. Trump tested positive for Covid-19, raising questions about the functioning of the government, the election campaign and the Supreme Court nomination process if the president were to be sidelined.

Equities remain sensitive to any signals about the state of Mr. Trump’s health, investors said. Mr. Trump’s medical team has said he could be sent back to the White House as soon as Monday, following several days of contradictory information from doctors and advisers.

The upbeat assessment has “helped risk appetite, but I would be more skeptical,” said Jane Foley, head of foreign-exchange strategy at Rabobank. “There’s been a little confusion about what doctors have said, and to-ing and fro-ing about his condition.”

Vice President Joe Biden’s lead over the president also appears to have widened, according to a poll conducted by The Wall Street Journal and NBC News in the two days following the debate. That signals there may be less room for dispute over the results of the November elections, which would be welcomed by markets.

Still, the poll was conducted before news emerged that Mr. Trump had tested positive for Covid-19.

In recent weeks, markets have grown increasingly skeptical that Democrats and the White House will reach an agreement over the size and terms of the government’s next coronavirus-relief spending package. Many investors are instead trying to assess what a victory for Mr. Biden might mean for the fiscal package and for issues such as corporate taxes.

“People are starting to question whether or not a Biden win would be an outright negative for equities,” said James McCormick, a strategist at NatWest Markets. “There are tax implications, but there are also some positive stimulus implications.”

In economic data, the U.S. services sector posted a steady increase last month, marking its fourth straight month of gains after large contractions in April and May.

Political and economic uncertainty has led to choppy trading in recent days, and there are signs that the market turbulence will continue. The Cboe Volatility Index, an options-based gauge of investors’ expectations for market swings, is near its highest level in almost a month.

President Trump waved to supporters outside Walter Reed National Military Medical Center during a drive-by in his motorcade. The brief trip was a departure from government health guidelines for Covid-19 patients to remain isolated. Photo: Alex Edelman/AFP via Getty Images

Regeneron Pharmaceuticals

shares rose 5.8% after the White House said Friday the president received an eight-gram dose of Regeneron’s antibody drug cocktail as a precautionary measure.

Shares in

MyoKardia

jumped 58% after

Bristol Myers Squibb

said it will buy the biotech company in a $13.1 billion deal aimed at expanding the cancer-drug powerhouse’s lineup of heart drugs.

Shares in

Cineworld Group,

which owns Regal Entertainment Group, plummeted 36% in London after the second-largest cinema chain in the U.S. said it was closing all of its locations nationwide, after reopening in August, escalating the pandemic-driven crisis facing the entertainment industry.

In bond markets, the yield on the benchmark 10-year U.S. Treasury ticked higher to 0.725%, from 0.694% Friday.

In commodities, Brent crude, the international energy benchmark, rose 3.5% to $40.63 a barrel.

Overseas, the pan-continental Stoxx Europe 600 rose 0.7%.

Major Asian stock markets also rallied by the close of trading. Japan’s Nikkei 225 rose 1.2%. Hong Kong’s Hang Seng Index advanced 1.3%. China’s Shanghai Composite Index remained closed for a holiday.

A screen displaying Japan’s Nikkei and other world stock indexes outside a brokerage in Tokyo on Monday.



Photo:

issei kato/Reuters

Write to Anna Isaac at anna.isaac@wsj.com

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8



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