Dow surges 350 points on hope of economy reopening, closes above 24,000

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Investors appear optimistic over gradual reopening of US economy, says Ally Invest's Lindsey Bell
Investors appear optimistic over gradual reopening of US economy, says Ally Invest's Lindsey Bell

Stocks rose on Monday as investors cheered the possibility of reopening the economy after the coronavirus outbreak.

The Dow Jones Industrial Average closed 358.51 points higher, or 1.5%, at 24,133.78. Monday marked the Dow's first close above 24,000 since April 17. The S&P 500 gained 1.5% to close at 2,878.48 while the Nasdaq Composite advanced 1.1% to 8,730.16. (Click here for the latest market news.)

Monday's gains put the S&P 500 on pace for its biggest one-month gain since 1987 with an 11.4% surge in April. The Dow is up 10.1% month to date; that would be its best monthly performance since 2002. 

Stocks that would benefit most from an economic reopening led the way higher on Monday. MGM Resorts and Carnival both climbed more than 8%. Gap and Kohl's gained 12.9% and 17.7%, respectively. 

"Additional global stimulus measures, slowing COVID-19 cases, and signals of normalcy returning are no doubt good news in the current environment. That said, the economy is a far cry from even walking shape right now — it's slowly crawling back to life," said Mike Loewengart, vice president of investment strategy at E-Trade.

States including Alaska, Georgia, South Carolina, Tennessee and Texas are beginning to allow restaurants and other establishments to serve customers. Ohio Gov. Mike DeWine said consumer retail and services can start reopening on May 12. 

New York Gov. Andrew Cuomo said Sunday the state plans to reopen its economy in phases. The first phase, Cuomo said, would involve New York's construction and manufacturing sectors. As part of the second phase, businesses will need to design plans for a reopening that include social distancing practices and having personal protective equipment available. Cuomo also noted that coronavirus-related hospitalizations have fallen for 14 days and that virus deaths in New York hit a near one-month low.

"As various states begin to reopen their economies and relax social distancing rules, we will get a glimpse of what the new normal looks like," said Marc Chaikin, CEO of Chaikin Analytics. "The biggest risk to the stock market is a premature reopening of the U.S. economy which results in an increase in COVID-19 cases and requires an abrupt reversal of these efforts to awaken the economy out of its engineered coma."

JPMorgan Chase and Disney were the best-performing Dow stocks, rising more than 4% each. The financials sector led the S&P 500 higher, climbing more than 3%. Citigroup shares rallied more than 6% while Wells Fargo and Bank of America were each up over 4%.

Stocks also shrugged off a decline in oil prices of nearly 25%.

Wall Street's coming off its first weekly decline in three as a record plunge in crude prices last Monday and Tuesday sent investors on a wild ride. Both the Dow and S&P 500 fell over 1% last week while the Nasdaq Composite dipped 0.2%.

Still, coronavirus shelter-in-place orders and social distancing guidelines remain Wall Street's No. 1 concern as the rules keep thousands of businesses closed. Officials have confirmed nearly 3 million Covid-19 cases worldwide with over 900,000 in the U.S., according to data from Johns Hopkins.

The outbreak, and subsequent business closures, sparked a wave of job losses. Data from the Labor Department show that more than 26 million people have filed for unemployment benefits over the past five weeks.

To be sure, a decline in new virus infections and unprecedented monetary and fiscal stimulus have sparked a massive stock-market rally from the lows reached on March 23. Since then, the major averages are all up more than 20%, with the S&P 500 retracing about half of its decline from a record set Feb. 19.

Investors have also cheered the prospects of Gilead Sciences' remdesivir as a potential treatment for the coronavirus. On April 16, STAT News reported patients at a Chicago hospital with severe coronavirus symptoms were quickly recovering after being treated with the drug in a trial.

A Financial Times report on Wednesday quelled some of that excitement, however, as it stated remdesivir did not improve patients' conditions during a trial in China. Gilead pushed back on the report and the study it cited, noting the trial was "was terminated early due to low enrollment," making it "underpowered to enable statistically meaningful conclusions."

Meanwhile, a New York Times report said a potential virus vaccine is scheduled for testing on more than 6,000 people by the end of May. That possible vaccine is being developed at Oxford University's Jenner Institute and showed promise in protecting monkeys from the virus. 

Overall, expectations for some medical coronavirus treatment have risen since the broader market reached its late-March lows. The CNBC Covid-19 Testing & Treatments Index, an equal-weighted basket that tracks 29 companies working on virus testing and treatment, has traded in near lockstep with the S&P 500 since March 23.

—CNBC's Michael Bloom contributed to this report.

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