U.S. stocks jumped higher as markets opened Monday on signs that President Donald Trump’s health was improving and on stimulus hopes, bringing some relief to markets after uncertainty over his COVID-19 infection sparked a shift away from risk assets last week as investors sought refuge in save havens like bonds and gold.
Trump announced on Friday he and First Lady Melania Trump tested positive for COVID-19, the illness caused by the CCP (Chinese Communist Party) virus. The president was flown to a hospital for treatment later that day, but his doctors said he had responded well to treatment and could return to the White House as soon as Monday.
The Dow Jones, the tech-heavy Nasdaq, and the benchmark S&P 500 all surged after opening bell. By around 10:30 ET, the Dow was up 1.23 percent, the Nasdaq was up 1.7 percent, and the S&P 500 was up 1.32 percent.
News that Trump could leave the hospital also sent oil higher, with U.S. crude up by over 6 percent at 10:39 ET, while Brent crude rose by over 5.6 percent. Yields on benchmark 10-year Treasuries rose by over 8.5 percent by 10:41 ET, suggesting investors felt comfortable taking on more risk.
On Friday, following Trump’s diagnosis and failure of lawmakers to reach agreement on the next virus relief bill, U.S. stock indexes closed moderately lower, with the S&P 500 closing down 0.96 percent, the Dow Jones ending the week down 0.48 percent, and the Nasdaq down 2.83 percent at closing bell.
Monday’s relief rally comes as initial concerns about Trump’s health appear to have eased somewhat, though investors remain sensitive to news about how the illness is affecting the president and, more broadly, to the dynamics of the outbreak and prospects for renewed lockdowns. Doctors said on Sunday that Trump’s condition had greatly improved, though they also noted that his blood oxygen level had dropped twice and that he was taking a steroid typically taken by people who are seriously ill.
“Many questions remain including the use of the steroid drug … which is usually reserved for those with severe illness,” said Raymond James strategist Chris Bailey in London. “Global cases now top 35 million and various new restrictions in Paris, New York, etc,” he said.
Trump’s infection also comes less than a month before the presidential election on Nov. 3, potentially fueling more market volatility. The volatility VIX index, known as Wall Street’s fear gauge, in Monday morning pre-market trading remained close to the one-week high it hit on Friday.
“In terms of the impact on the election, we haven’t seen enough polling to assess whether this increases or decreases his chances of winning,” said Deutsche Bank strategists.
Epoch Times contributor Roger L. Simon wrote in a recent op-ed that he believes Trump falling ill with the virus will improve his chances of reelection.
“Donald Trump will benefit greatly from his bout with COVID-19, assuming it is not too severe, and right now, it would appear that it’s not,” Simon wrote. “It will give him a time out, a cooling-off period from a political campaign that had become too hot to handle, and will ultimately allow him to win.”
Reuters contributed to this report.