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Stock Market News for Jun 17, 2020

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Record jump in domestic retail sales, Trump’s push for an infrastructure bill and a coronavirus breakthrough collectively helped the stock market close in the green.

The Dow Jones Industrial Average (DJI) rose 526.82 points, or 2%, to close at 26,289.98 and the S&P 500 added 58.15 points, or 1.9% to close at of 3,124.74. While, the Nasdaq Composite Index closed at 9,895.84, adding 169.84 points, or 1.8%. The fear-gauge CBOE Volatility Index (VIX) decreased 2.1%, to close at 33.67. Advancing issues outnumbered declining ones for 4.42-to-1 ratio on the NYSE and a 3.05-to-1 ratio on the Nasdaq favored advancers.

How Did the Benchmarks Perform?

Benchmarks posted their third consecutive daily gains. However, the Dow and the S&P 500 still remain about 11% and 8% below their record closing highs achieved in February this year. Meanwhile the Nasdaq is just 1% below its all-time closing high reached on June 10.

Stronger than expected homebuilder sentiment data helped related retailers soar and boost the blue-chip index. Shares of The Home Depot, Inc. (HD - Free Report) closed 3.6% higher on Tuesday. Additionally, companies benefiting from the economy reopening drove indexes higher. Shares of Delta Air Lines, Inc. (DAL - Free Report) , Carnival Corporation & Plc (CCL - Free Report) and Kohl's Corporation (KSS - Free Report) closed 2.8%, 5.1% and nearly 9% higher, respectively.

Home Depot and Kohl's carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

All the 11 major sectors of the S&P 500 finished in the green led by more than 2% gains in energy, health and material sectors. Overall, the S&P 500 posted seven new 52-week highs and no new lows, while the Nasdaq Composite recorded 97 new highs and seven new lows.

Rebound in Retail Lifts Wall Street

On Jun 16, the U.S. Department of Commerce reported that retail and food services sales for May were $485.5 billion, an increase of 17.7% from the month before. The jump in retail sales surpassed the consensus estimate of an 8.2% increase. Sales dropped 8.3% in March and 14.7% in April after coronavirus cases rose in the United States and forced the economy to shut down.

Coronavirus-led lockdowns boosted sales of non-store retailers and building materials stores that remained operational. Non-store sales jumped 9% from the previous month and rose 30.8% from May 2019. Restaurant receipts also increased 29.1% after being completely shuttered during the lockdown. In several states, food services and drinking places saw customers coming in as administration allowed outdoor dining after months of being restricted to curbside pickup and delivery only.

Not only did the positive retail sales data helped major indexes soar, the S&P Retail ETF rose 2.7% and the Van Eck Vectors Retail ETF gained 2.4% on the same day.

Prospects of Infrastructure Stimulus Package

On Tuesday, prospects of a $1 trillion dollar infrastructure package aimed at jump-starting the economy by the Trump’s administration boosted investor’s sentiments. As per the preliminary version of the plan, majority of the money would be set aside for traditional infrastructure projects such as roads and bridges, and the rest would be allocated for 5G wireless infrastructure and rural broadband.

Share of Caterpillar Inc. (CAT - Free Report) jumped 5.3% after the news, and also helped the Dow end higher.

Positive Trial Results for COVID-19 Treatment

Per a BBC report on Tuesday, dexamethasone, a cheap and widely available steroid has reportedly shown positive results to help critically ill coronavirus patients. The drug can help in reducing Covid-19 deaths in hospitalized patients by up to one third.  The steroid has shown signs of success in low doses when prescribed to patients who are suffering serious symptoms of COVID-19.

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