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Dow Gains 250 Points As Stocks Rally Despite Civil Unrest

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TOPLINE

The market finished higher on Tuesday, with stocks continuing to rally on optimism about a reopening of the economy despite widespread civil unrest across the country over the killing of George Floyd.

Protesters march across the Brooklyn Bridge as part of a rally calling for justice over the death of … [+] George Floyd.

Wong Maye-E/ASSOCIATED PRESS

KEY FACTS

The Dow Jones Industrial Average was up 1.1%, over 250 points, on Tuesday, while the S&P 500 rose 0.8% and the tech-heavy Nasdaq gained 0.6%.

Stocks posted a second straight day of gains, despite widespread civil unrest across the country stemming from the death of George Floyd. The market has largely looked past the protests and riots taking place in many big cities, instead moving higher on optimism about reopening of the economy.

Investors don’t see the mass protests as a threat to either corporate earnings or an economic recovery, at least not yet: The S&P 500 is up 2.5% since the unrest began on May 26.

Stocks that would benefit from a reopening jumped on Tuesday, including airlines, cruise operators and casinos. Some retailers and banks also posted strong gains, while tech shares largely declined.

If protests continue for longer than expected, which could postpone the reopening of the economy and hurt consumer confidence, that could have adverse effects on markets, experts say.

“Good news on vaccines helped stocks in May, but U.S.-China relations and civil unrest could steal the spotlight in June,” according to a recent note from Lori Calvasina, chief U.S. equity strategist for RBC Capital Markets. “The S&P 500 remains highly news flow driven.”

Crucial quote

“As painful as this is right now, it hasn’t gotten to the point where it changes the market’s outlook for a recovery—it’s that simple,” says Mark Freeman, chief investment officer at Socorro Asset Management. “The market isn’t looking at 2020, but instead to 2021 and beyond that.”

Chief critic

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Stocks are rallying—even after several days of escalating protests across the country—because the market is blind to social justice, CNBC anchor Jim Cramer said on Monday. “The market has no conscience,” he said. “Investors are simply trying to make money.”

What to watch for

Rising U.S.-China tensions are another source of worry for investors, with the phase one trade deal potentially at stake. President Trump on Friday announced that he would revoke Hong Kong’s favorable trade status and sanction certain Chinese officials. Trump’s announcement came in response to Beijing’s new national security bill for Hong Kong, which reduced the city’s autonomy from mainland China.

Key background

The market is higher so far in June, following back-to-back monthly gains. The Dow rose nearly 100 points on Monday, while the S&P 500 gained 0.3%. Both indexes rose more than 4% in May, after rallying more than 11% in April. The S&P is now up 40% from its coronavirus crisis-level low on March 23.

Further reading

Mass Protests Across The U.S. Have No Impact On Stocks, What Gives? (Forbes)

Stocks Turn Positive After Trump Keeps Phase One China Trade Deal Intact (Forbes)

Trump Announces New Sanctions On Chinese Officials, But Won’t Scrap Phase One Trade Deal (Forbes)

Dow Closes Above 25,000 For First Time Since March (Forbes)

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