US STOCKS-S&P 500 rises on economic recovery and vaccine hopes, pulls back from highs

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By Sinéad Carew
New York, May 26 (Reuters) - U.S. stocks closed higher on
Tuesday on optimism about developing coronavirus vaccines and
the revival of business activity, but the S&P 500 failed to hold
above the key psychological level of 3,000 points.
Stocks pared gains late in the session, after Bloomberg News
reported the Trump administration was weighing a range of
sanctions on Chinese officials, businesses and financial
institutions, reinforcing comments earlier in the day from White
House adviser Larry Kudlow.
Kudlow said President Donald Trump was "so miffed with China
on virus and other matters that the trade deal is not as
important to him as it once was." The benchmark S&P 500 had crossed 3,000 for the first time
since March 5 before dropping back.
The S&P 500 .SPX has risen about 37% from its March 23 low
on central bank and government stimulus at a time when the U.S.
economy is seeing its biggest job losses since the Great
Depression of the 1930s. It is now about 11% below its February
record high.
On Monday, California, which has had one of the country's
most restrictive shutdowns, said it would allow retail
businesses to offer in-store shopping and places of worship to
reopen. On top of vaccine-related news, Shawn Snyder, head of
investment strategy at Citi Personal Wealth Management, pointed
to better-than-expected home sales data and comments from
JPMorgan Chase JPM.N CEO Jamie Dimon. "When you add the news all together everyone's getting a
boost," Snyder said.
Data showed U.S. consumer confidence nudged up in May,
adding to hopes that the worst of the economic impact of the
shutdown is in the past. Unofficially, the Dow Jones Industrial Average .DJI rose
531.53 points, or 2.17%, to 24,996.69, the S&P 500 .SPX gained
36.36 points, or 1.23%, to 2,991.81, and the Nasdaq Composite
.IXIC added 15.63 points, or 0.17%, to 9,340.22.
U.S. biotech group Novavax Inc NVAX.O soared as it joined
the race to test coronavirus vaccine candidates on humans and
enrolled its first participants. Merck & Co Inc MRK.N advanced
after it announced plans to develop two separate vaccines.
While macroeconomic data was pointing at a deep recession,
Citi's Snyder was focused on the recovery. But he questioned how
much further the market would rise with the U.S. presidential
election in November and simmering U.S.-China tensions.
"The returns from here will be harder to come by," he said.
Beaten-down travel-related stocks climbed including the S&P
1500 airlines stocks index .SPCOMAIR and cruise operators
including Carnival Corp CCL.N .
The New York Stock Exchange on Tuesday partially reopened
its trading floors at the iconic 11 Wall Street building, which
had been closed since March 23.