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US: Dow ends up 2.2%, extending rally on reopening optimism

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The Dow posted big gains again on Wednesday on continued optimism over the reopening of the US economy, even as a fresh Federal Reserve report pointed to anxiety among many businesses.

[NEW YORK] The Dow posted big gains again on Wednesday on continued optimism over the reopening of the US economy, even as a fresh Federal Reserve report pointed to anxiety among many businesses.

The Dow Jones Industrial Average stood rose 2.2 per cent or more than 550 points to 25,548.27.

The broad-based S&P 500 gained 1.5 per cent to 3,036.13, while the tech-rich Nasdaq Composite Index advanced 0.8 per cent to 9,412.36.

Cyclical sectors such as banks and industrials led the market, along with airlines, hotels and other businesses that have been hit especially hard during the coronavirus crisis.

Investors are drawing hope from announcements such as Disney's plan on Wednesday to reopen its Florida theme parks and a decision by the Nevada governor late Tuesday to give the all clear for Las Vegas casinos to reopen with restrictions.

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Quincy Krosby, chief market strategist at Prudential Financial, said markets have also been impressed by an uptick in mortgage applications.

"You have to get some confidence," Mr Krosby said.

Still, markets are bracing for more bad economic data. Analysts expect Thursday's jobless claims report to show almost two million more people being added to the unemployment rolls.

A Fed report described the outlook for businesses as "highly uncertain" with many companies "pessimistic about the potential pace of recovery."

Businesses also cited a list of "challenges in bringing employees back to work, including workers' health concerns, limited access to childcare and generous unemployment insurance benefits," the report said.

Citing the market's surge from its March lows, "one can't help but wonder if the market has gotten ahead of its fundamentals," said CFRA Research's Sam Stovall.

Among individual companies, pizza chain Papa John's International rocketed 6.2 per cent higher after reporting North American sales jumped 33.5 per cent in May compared to the same month in 2019, thanks to surging demand due to coronavirus shutdowns.

Rival chain Domino's Pizza gained 3.8 per cent as it reported a 14 per cent rise in US comparable sales over the last eight weeks.

AFP

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