US open: Stocks record solid gains at the bell as investors shrug off IMF warning

US stocks opened sharply higher on Wednesday as investors shrugged off a warning from the IMF and chose to focus on news that early results from Super Tuesday voting had former Vice President Joe Biden picking up some key wins and cementing his place as one of the top candidates in the Democratic pool.

As of 1530 GMT, the Dow Jones Industrial Average was up 2.18% at 26,482.98, while the S&P 500 was 1.85% firmer at 3,058.84 and the Nasdaq Composite came out of the gate 1.68% stronger at 8,829.88.

The Dow opened 565.57 points higher on Wednesday as stocks tried to recover some of the losses recorded in the previous session following an unscheduled rate cut from the Federal Reserve that for some observers said inadvertently strengthened fears of a coronavirus-stoked recession, although others said it was a case of catch-22.

Oanda's Craig Erlam said: "Volatility is going nowhere but the stock market sell-off appears to have stabilized, at least for now, with healthy gains being seen for the second time this week.

"Once again, it's central banks to the rescue with the Fed opting for a little shock therapy with its unscheduled 50 basis point cut and others doing so in the more traditional manner. That's not going to solve any problems in the real world but it may sustain financial markets in the medium term and allow other policymakers to step up."

Underlining sentiment on Wednesday was Joe Biden's success, which buoyed investor sentiment as he notched up a series of wins in key southern states - including Virginia, North Carolina, and Arkansas. NBC News has projected Biden to score 453 total delegates, ahead of Vermont Senator Bernie Sanders' total of 373.

To win the nomination, a Democratic candidate must receive support from at least 1,991 of the party's total 3,979 delegates.

Mike Bloomberg also dropped out of the presidential race following his poor performance on Super Tuesday and went on to throw his support behind Biden.

The former VP's solid showing saw shares in health-care companies like Centene and UnitedHealth, some of the largest health insurers in the United States, making some positive moves on Wednesday, after Sanders' recent rise in polls had seen the industry come under selling pressure.

Investors also seemed to shrug off news that the Washington-based International Monetary Fund had become the latest body to cut GDP forecasts, claiming that "global growth in 2020 will dip below last year’s levels".

The IMF, which was previously expecting worldwide growth of 3.3%, did not issue any exact forecasts but said that previous growth estimates were "no longer valid".

Elsewhere, the benchmark 10-year US Treasury yield fell below 1% for the first time ever, while gold jumped 2.9% to $1,644.40 per ounce.

On the macro front, weekly mortgage refinances spiked 26% across the US as interest rates tanked on coronavirus fears.

According to the Mortgage Bankers Association, total mortgage application volume was up 15.1% week-on-week as the average contract interest rate for 30-year fixed-rate mortgages fell to 3.57% from 3.73% last week. Refinance volume was nearly 224% higher year-on-year.

Elsewhere, private-sector payroll growth in the States slowed last month, the results of a closely-followed survey revealed.

According to consultancy ADP, privately-owned companies in the US took on 183 new hires in February, after a downwardly-revised 209,000 for January (preliminary: 291,000).

Still on data, economic activity in the US' private sector contracted at a modest pace in February, with IHS Markit's Composite PMI falling to 49.6 from 53.3 in January, matching previous estimates and market expectations. The report also revealed that the Services PMI slumped to 49.4 from 53.4, as expected.

Lastly, the Institute for Supply Management's non-manufacturing activity index increased to 57.3 last month - its highest level since February 2019. A reading above 50 indicates expansion in the services sector, which accounts for more than two-thirds of US economic activity.

North of the border, in Canada, rate-setters cut short-term interest rates by 50 basis points, following the lead taken by Australia, Indonesia, Malaysia and the US over the last few days.

The Federal Reserve's beige book will be released at 1900 GMT.

In the corporate space, shares in Inovio Pharmaceuticals shot up 20.19% at the bell after the firm said it was accelerating its timeline for the development of a vaccine aimed at treating the Wuhan coronavirus. Inovio expects to start human trials in the US in April.

Abercrombie & Fitch shares were up 5.99% after beating fourth-quarter same-store sales estimates, while Dollar Tree shares were down 1.31% after posting a sales miss.