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Wall Street set for higher open as new coronavirus cases drop

Kitco News

(Reuters) - Wall Street was set to open near record highs on Wednesday after a drop in the number of new cases of coronavirus infections in China raised hopes that the economic fallout from the outbreak would be contained.

China on Wednesday reported its lowest number of new coronavirus cases since January, lending weight to a prediction by its top medical adviser for the outbreak to end by April, even as the death toll in the country rose to more than 1,100 people.

However, it was still unclear to what extent economic growth would take a hit from the fast-spreading virus that has killed more than 1,100 people, shuttered businesses in China and roiled financial markets late January.

Most experts believe China faces a short but sharper economic shock than originally thought, one that will be felt around the world.

“The estimates for the hit to the Chinese economy is very wide ranging, but mostly there’s optimism the impact to the U.S. economy is going to be minimal,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.

“Ultimately if the case count growth rate continues to slow, this optimism continues.”

The benchmark S&P 500 has climbed more than 4.5% from late January lows as largely positive fourth quarter earnings, encouraging U.S. economic data and stimulus from China spurred a demand for risk despite concerns about the virus outbreak.

The S&P 500 .SPX and the Nasdaq .IXIC hit record closing highs on Tuesday.

At 8:48 a.m. ET, Dow e-minis 1YMcv1 were up 138 points, or 0.47%. S&P 500 e-minis EScv1 were up 13 points, or 0.39% and Nasdaq 100 e-minis NQcv1 were up 45.25 points, or 0.47%.

CVS Health Corp (CVS.N) rose 1.8% as the drugstore chain posted a better-than-expected quarterly profit.

Micron Technology Inc (MU.O) gained 2.9% after UBS raised the rating on the chipmaker’s shares to “buy”, while Wynn Resorts Ltd (WYNN.O) advanced 2.7% after Bank of America Global Research upgraded its shares to “buy”.

Among stocks, oil major Exxon Mobil Corp (XOM.N) and Chevron Corp (CVX.N) gained about 1% each as oil prices surged. [O/R]

Markets will also closely follow remarks from U.S. Federal Reserve Chair Jerome Powell as he resumes the second day of his semiannual economic report to the Congress.

Reporting by Medha Singh in Bengaluru; Editing by Shounak Dasgupta

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