Vaccine, Reopening Optimism Boosts Stocks…..

U.S. equities soared on the first trading day of the week, as optimism jumped amid the continued progress on reopenings of world economies, as well as today’s announcement of upbeat trial results from Moderna of its COVID-19 vaccine candidate. As well, comments over the weekend from Federal Reserve Chairman Jerome Powell were positively received, as he noted the Central Bank still has ammunition in its campaign to stabilize the economy and financial markets. Treasury yields were markedly higher as bond prices declined, and the U.S. dollar came under solid pressure. In economic news, a May home builder sentiment rebounded from April’s record drop to kick off a heavy week of data. Meanwhile, crude oil prices extended a sharp recovery, giving the energy sector a boost, and gold was lower. Europe finished with widespread gains amid the optimism, and markets in Asia saw modest gains.

The Dow Jones Industrial Average soared 912 points (3.9%) to 24,597, the S&P 500 Index rallied 90 points (3.2%) to 2,954, and the Nasdaq Composite jumped 220 points (2.4%) to 9,235. In heavy volume, 1.2 billion shares were traded on the NYSE and 4.3 billion shares changed hands on the NASDAQ. WTI crude oil gained $2.13 to $31.65 per barrel and wholesale gasoline gained $0.06 to $1.03 per gallon. Elsewhere, the Bloomberg gold spot price declined $11.98 to $1,731.69 per ounce, while the Dollar Index—a comparison of the U.S. dollar to six major world currencies—tumbled 0.8% to 99.61.

Homebuilder sentiment improves to kick off heavy week, Treasury yields higher…..

The National Association of Home Builders (NAHB) Housing Market Index showed homebuilder sentiment in May rebounded more than expected to 37 after April’s record tumble to 30, and versus the Bloomberg forecast to rise to 34. A level south of 50 depicts poor conditions. The NAHB said, “The fact that most states classified housing as an essential business during this crisis helped to keep many residential construction workers on the job, and this is reflected in our latest builder survey.” The NAHB added that, “Builders are showing flexibility in this new business environment by making sure buyers have the knowledge and access to the homes they are seeking through innovative measures such as social media, virtual tours and online closings,” while low interest rates are helping to sustain demand.

Treasuries were lower, as the yield on the 2-year note gained 3 basis points (bps) to 0.18%, the yield on the 10-year note rose 9 bps to 0.73%, and the 30-year bond rate advanced 12 bps to 1.44%.

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