By Avantika Chilkoti, Chong Koh Ping and Karen Langley
U.S. stocks fell Friday, but hung on to strong weekly gains as
lawmakers sent President Trump the largest economic-relief package
in U.S. history in response to the coronavirus pandemic.
Investors have been on a roller-coaster ride as attempts to curb
the coronavirus pandemic constrain economic activity. Despite a
daily decline Friday, the Dow Jones Industrial Average was on pace
for a weekly gain of about 14% -- its best week since 1938. On
Thursday the Dow capped a furious three-day rally that pushed the
blue-chip index into a new bull market. That follows two weeks of
double-digit declines, one of which was the worst since October
The S&P 500 and the Nasdaq Composite were both headed toward
weekly gains of at least 10%. On the day, the Dow fell 4.1%, while
the S&P lost 3.4% and Nasdaq declined 3.8%.
Investors waiting for government spending measures to help
cushion the economic damage of the coronavirus pandemic watched as
the House passed a $2 trillion stimulus package by a voice vote
Friday afternoon, sending it to the president's desk.
The bill, which passed the Senate late Wednesday, is the largest
economic-relief package in history and would extend aid to many
Americans through direct payments and expanded unemployment
insurance. A record 3.28 million U.S. workers applied for
unemployment benefits last week, nearly five times the previous
Earlier in the week, the Federal Reserve signaled a wide-ranging
effort to help the U.S. economy by extending loans and purchasing
hundreds of billions of dollars in government debt.
"What the market is saying is earnings are going to be really
bad in the near term, economic growth is going to be really bad in
the near term, but with this kind of a stimulus I can see that a
recovery will happen at some point later this year potentially,"
said Mike Wilson, chief U.S. equity strategist and chief investment
officer for Morgan Stanley.
Despite the week's gains for stocks, there were signs that
investors remain cautious. Gold, a traditional safe haven, posted
its largest one-week percentage gain since September 2008.
The U.S. overtook China this week as the country with the most
coronavirus cases with 85,991 confirmed infections, while
fatalities topped 1,296. Hospitals in the New York metro area and
Seattle have been overwhelmed despite stringent measures to curtail
Adding to concerns about how long the pandemic may damp economic
activity, China said Thursday it would close its borders to nearly
all foreigners and drastically slash international flights in a bid
to curb the reintroduction of the virus from abroad.
"Underlying all this is how do we get this virus under control,"
said Neil Hennessy, chief investment officer of Hennessy Funds.
"Once we have it under control or it peaks, subsides, whatever,
then the market will be back on its legs."
The spread of the virus -- and the economic fallout from
measures put in place to halt the outbreak -- has fueled debate on
whether the U.S. needs to continue enforcing a strict lockdown that
is eroding business activity and output. The Trump administration
is planning to issue guidelines aimed at helping state and local
authorities decide whether to tighten or relax measures designed to
help slow infections.
Investors and business leaders remain concerned that emergency
measures by the Federal Reserve and U.S. lawmakers, including the
stimulus package, may not prevent a sharp U.S. recession that could
have global consequences.
"What we're trying to do is put the economy on ice and sow the
seeds of a strong rebound as soon as the crisis is over, recouping
as much economic ground as possible," said Richard McGuire, head of
rates strategy at Rabobank. "It's a volatile environment where we
will, within that context, see repeated bold policy responses, but
they are pushing on an open door."
The Cboe Volatility Index, a closely watched measure of
turbulence in U.S. stocks, was on pace to finish the week lower
after rising for five consecutive weeks, though it remained
elevated. Many investors expect the recent volatility in the
markets to persist.
"I think this will continue for some time," said Nancy Tengler,
chief investment officer at Laffer Tengler Investments. "The news
is going to be spotty and investors have been scrambling."
Oil prices declined after the U.S. Department of Energy
suspended the purchase of 30 million barrels of crude oil it was
going to add to its Strategic Petroleum Reserve. The meeting of
G-20 leaders also disappointed some traders after it failed to
produce any statement that related to oil or the price war raging
between Saudi Arabia and Russia. U.S. crude declined 4.9% for the
week to $21.51 a barrel.
In Asia, most major markets drifted higher by the close of
trading. Japan's Nikkei 225 was the best performer, rising 3.9% to
end what was the gauge's best week in its 70-year history.
Write to Avantika Chilkoti at Avantika.Chilkoti@wsj.com, Chong
Koh Ping at firstname.lastname@example.org and Karen Langley at
(END) Dow Jones Newswires
March 27, 2020 16:18 ET (20:18 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.