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The Dow Is Suddenly on Autopilot, and Boeing Stock Is in the Cockpit

Last Updated September 23, 2020 1:58 PM
Francois Aure
Last Updated September 23, 2020 1:58 PM
  • The Dow Jones recorded another banner day, rallying close to 500 points on Wednesday.
  • China, Europe, and the United States are all showing evidence of a V-shaped recovery.
  • Dow giant Boeing was a significant boost to the U.S. stock market with an incredible 12% rally.

Wednesday brought a third straight day of gains for the Dow Jones Industrial Average, which rose around 500 points to post its best June session yet.

Chinese economic data is showing strong signs of a rebound, and this has bulls hoping for a similar story in the United States after ADP’s blockbuster employment report.

U.S. Stock Market Rallies Again as Economic Data Rebounds

Dow Jones, Stock Market,
The Dow Jones rose for a third straight day as economic data around the world improved. | Source: Yahoo Finance 

All three major U.S. stock market indices rallied on Wednesday, but the Dow was far and away the top performer:

  • The Dow surged 501.18 points or 1.95% to 26,243.83.
  • The S&P 500 rallied 1.35% to 3,122.51.
  • The Nasdaq climbed 0.8% to 9,685.

There is a strange dynamic playing out on Wall Street, as terrible economic data is actually helping to fortify the stock market rally. Ugly though they may be, these statistics are still coming in better than anticipated.

Consider ADP’s non-farm payrolls report . Economists expected a truly horrific reading of 9 million job losses in May, but the official data showed fewer than 2.8 million workers had dropped off payrolls.

A slew of PMI readings in the United States and Europe came in above forecasts, and there are burgeoning signs of a V-shaped recovery in home and auto sales too.

Both these sectors are important pillars of the labor market, so a rebound in manufacturing and construction is an undeniably good sign.

And it’s not the only one.

Dow Jones, Stock Market, Economic data
Two key economic sectors are showing signs of a V-shaped recovery. | Source: Think ING 

The world’s second-largest economy, China, continues to stoke risk appetite with strong economic data that Wall Street bulls hope is a precursor of things to come in the U.S.

Most recently, Caixin Services PMI came in far above estimates, bolstering confidence that consumers are more resilient than economists believed.

Joshua Mahony, senior market analyst at IG, believes that Chinese data is a significant tailwind for equities, though he does caution against getting too excited about the strong readings.

He said in a statement shared with CCN.com:

Overnight data from China has helped bolster confidence of an economic rebound in the region, after the Privately compiled Caixin services PMI reading jumped into strong expansion. China provides a leading gauge of where the likes of Europe and the US could be if a similar path is taken.

However, traders should be cautious given that this rise back into expansion does simply highlight month-on-month improvements rather than making any relative comparison to pre-crisis levels.

Dow Stocks: Boeing Soars – and the Rest of the Index Follows

dow stock boeing
Boeing stock’s breathtaking rally powered the Dow Jones higher on Wednesday. | Source: ERIC PIERMONT / AFP

An astonishing 12% surge in Boeing stock helped to power the Dow 30 higher  as investors took risk-on trades in the aviation industry.

With lockdowns winding down, demand for air travel has increased , perhaps more quickly than some investors expected. This boosts the outlook for Boeing – the company that manufactures most of the industry’s planes.

Soaring Treasury yields are typically a positive catalyst for major financial institutions, so it was no surprise to see Goldman Sachs (+3%) and JPMorgan Chase (+5.5%) rally strongly today.

On the other end of the ledger, tech giant Apple managed just a 0.5% gain. Pandemic play Walmart fell 0.35% as investors shunned defensive investments.