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U.S. stocks advance for a third day on rising trade optimism

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The S&P 500 climbed to an 11-week high, holding above 3,000 points and its average price for the past 200 days

U.S. stocks advanced for a third day on rising optimism the pandemic’s damage to the economy has peaked. Treasuries rose and oil slipped.

The S&P 500 climbed to an 11-week high, holding above 3,000 points and its average price for the past 200 days, technical levels considered key by chart watchers. For a second day, stocks most punished by the effects of the economy shutting, from Carnival Corp. to United Airlines, performed best as investors anticipate a sharp uptick in spending on non-essential goods and services. Stay-at-home beneficiaries from Peloton Interactive to Zoom Video Communications fell.

The Nasdaq indexes turned positive late in the session after Micron Technologies forecast earnings that were ahead of estimates, lifting chipmakers. The Russell 200 jumped more than 3%, and the Dow Jones Industrial Average surged 2.2%, led by American Express and Goldman Sachs.

The recent equity rally “is an indication that investors are getting optimistic about the reopening of the economy and the drug-treatment development,” Katerina Simonetti, senior portfolio manager at UBS Private Wealth, said on Bloomberg TV. We hope that it will eventually lead to a normalization in the market, but we have to keep an eye on the re-emergence of virus cases.

Rising tensions with China continued occupy part of investors’ minds. Secretary of State Mike Pompeo said the U.S. has certified that Hong Kong is no longer politically autonomous from China, a move that could have far-reaching consequences on its special trading status. On Tuesday, reports indicated the U.S. was considering sanctions over Beijing’s crackdown in the former British colony. Futures on the Hang Seng index fell.

The Stoxx Europe 600 Index ended higher and Italy’s government bonds rose after details emerged of Europe’s package of grants and loans for up to 750 billion euros ($823 billion) to overcome the region’s deepest recession in living memory. The euro gained.

Investors are closely watching the new U.S.-China friction — including possible sanctions over Beijing’s crackdown in Hong Kong — as global stocks trade near levels not seen since early March on hopes that economies are beginning to recuperate after a deep downturn. The Federal Reserve’s “Beige Book” survey due for release later Wednesday may provide clues on the inflection point for the economy and near-term outlook for jobs.

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Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

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