US stocks open strongly on news of economic restart despite mixed job report

US companies slashed another 2.76 million jobs in May as the coronavirus pandemic continued to rip through the economy, payroll processing company ADP reported Wednesday.

But May's job losses were far below the 8.75 million expected by analysts surveyed by Dow Jones and a sharp decline from the 19.6 million jobs lost in April – the worst ever reported by ADP.

"While the labor market is still reeling from the effects of the pandemic, job loss likely peaked in April, as many states have begun a phased reopening of businesses," Ahu Yidirmaz, co-director of the ADP Research Institute, said in a statement.

Despite the mixed jobs report, US stocks rose Wednesday in early trading as the economy continues to reopen nationwide.

Small companies shed 435,00 jobs in May. Mid-sized organizations cut 722,000 jobs. Large businesses, or those with 500 workers or more, slashed 1.6 million jobs, ADP said.

ADP's National Employment Report is derived by the company's payroll data, which includes 460,000 companies with about 26 million employees.

The ADP report, compiled with assistance from Moody's Analytics, surveys company payrolls. It's a curtain-raiser for the US Labor Department's nationwide job report scheduled to be released Friday.

Economists expect the Labor Department to report the loss on another 8.33 million jobs in May. If accurate, that number would boost the unemployment rate to 19.5 percent from April's 14.7 percent.

April's job losses were revised down to 19.557 million from the initial 20.236 million, ADP said.

So far, the gradual reopening of the economy in the US hasn't sparked a second wave of infections. This has boosted investor confidence that the recovery will continue.

Apparent progress in developing a coronavirus vaccine has also increased investor confidence.

Anthony Fauci, White House health advisor and a top expert in the US government's response to the Covid-19 pandemic, on Tuesday said he was cautiously optimistic that several vaccines now being tested would prove effective "within a reasonable period of time."

But he warned that a new vaccine may not provide long-term immunity.

"When you look at the history of coronaviruses, the common coronaviruses that cause the common cold, the reports in the literature are that the durability of immunity that's protective ranges from to six months to almost always less than a year," he said.

"That's not a lot of durability and protection."

The National Institutes of Health have fast-tracked research by biotech company Moderna on a vaccine to prevent spread of the coronavirus.

In early trading Wednesday, Moderna's shares lost 2.37 percent.

Worldwide, the coronavirus has infected about 6.28 million people worldwide and killed at least 375,987, figures compiled by Johns Hopkins University show.

Home mortgage applications are 18 percent higher than a year ago, the Mortgage Bankers Association (MBA) reported.

The average interest rate for a 30-year fixed-rate mortgage for as much as $510,400 fell to 3.37 percent from 3.42 percent, the Washington-based research organization said.

"The pent-up demand from homebuyers returning to the market continues to support a recovery from the weekly declines observed earlier this spring," Joel Kan, the MBA's economist, said in a statement.

"However, there are still many households affected by the widespread job losses and current economic downturn. High unemployment and low housing supply may restrain a more meaningful rebound in purchase applications in the coming months."

US President Donald Trump is expected to meet with advisors this week or next to review plans for the next round of coronavirus stimulus spending. Democrats and Republicans appear to be far apart on the scope and cost of the bill.

Senate Majority Leader Mitch McConnell, a Kentucky Republican, has said the latest bill Democrats passed in the House is dead on arrival in the upper chamber.

An earlier package included direct payments of up to $1,200 to those with Social Security numbers. House Democrats seek to expand the benefit to non-citizens working in the US. Republicans oppose the idea.

But risks remain. Civil unrest, while less severe Tuesday night, may slow the reopening of many retail stores. Rioters looted Macy's flagship store on Herald Square in Manhattan and shops have been smashed across the country.

The presidential election in November adds another level of uncertainty and increased trade tensions between the US and China, the world's two largest economies, compounds the potential turmoil investors face.

In early trading Wednesday, the Dow Jones Industrial Average climbed 243.78 points, or 0.95 percent, to 25,986.03. The S&P 500 rose 0.81 percent. The Nasdaq Composite rose 0.49 percent.

On Tuesday, the Dow climbed 267.63 points, or 1.05 percent, and closed at 25,742.65. The S&P 500 rose 25.09 points, or 0.82 percent, and closed at 3,080.82. The Nasdaq Composite added 56.33 points, or 0.59 percent, and closed at 9,608.37.

On Wednesday, West Texas Intermediate crude, the guideline for US prices, rose one cent to $36.82 a barrel. Brent crude, the worldwide benchmark, dipped 31 cents to $39.26 a barrel.

Oil is an indicator of future economic activity. US prices briefly turned negative during the depth of the coronavirus shutdown as demand collapsed and supply exceeded storage capacity.

Zoom Video Communications said it earned 20 cents a share, compared with Wall Street's consensus estimate of 9 cents. The video conferencing company said the increase in remote working boosted revenue.

In early trading Wednesday, Zoom's stock slipped 0.37 percent.

Lyft, a ride-hailing company, said bookings in May rose 26 percent from April. The company said demand has increased seven weeks in a row, but May's total was 70 percent demand a year ago.

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>In early trading Wednesday, Lyft's stock gained 9.97 percent.