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Stocks Rise Wednesday — What’s Driving the Market

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Stocks rose Wednesday after rough Tuesday through the closing bell.  

All three major U.S. indices rose, with the S&P 500 up 1.2%. The 10 year treasury yield rose to 0.71%, signaling more risk-on sentiment. Yields rise when prices fall. 

Leading the market Wednesday was crude oil, which rose 2.6% to $32.80 a barrel. This directional trend is a huge positive for distressed oil companies. The Energy Select SPDR etf  (XLE) - Get The Energy Select Sector SPDR Fund Report rose 2.3%, with Exxon Mobil  (XOM) - Get Exxon Mobil Corporation Report palmist 2.5%. 

Part of the optimistic picture was state reopenings. New York has said recently it wants to open with restrictions in mid-June. Virginia may soon open Virginia beach at 50% capacity. These developments have enabled a high degree of optimism in markets this year, although the market’s biggest fears is a second wave of virus infections caused by premature openings. 

On the policy front, The Federal Reserve will release its minutes at 2 pm. The Fed has done what it can to provide a bridge from the depths of the crisis to a recovery, but investors still want to see of the Fed has any more ammunition in its back pocket to support the economy. 

"Clients have been asking about Fed Chair Jay Powell’s recent 60 Minutes interview and Congressional testimony, along with his overall dovish tone,” wrote Lauren Goodwin, Economist and Multi-Asset Strategist for New York Life Investments in emailed remarks to reporters. “Policymakers are in a race against time. As the virus impact on the economy prolongs, the risk of broader credit and labor market dislocations rises.” 

In the European Union, France and Germany are working to create a $500 billion rescue fund for the economy and certain industries. This fiscal stimulus is met with heavy resistance, as 27 member states will have their say, contrary to U.S fiscal stimulus, which is voted on by the two parties. European stimulus is a positive for U.S. companies with sales exposure to the block. 

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