Stocks Drop, But Finish the Week With Big Gains
By Karen Langley, Avantika Chilkoti and Chong Koh Ping
The Dow Jones Industrial Average posted its biggest weekly gain
since 1938, paring some of the losses of recent weeks, as lawmakers
agreed to 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 and policy
makers work to cushion the blow. Major U.S. stock indexes posted
double-digit gains for the week -- with the Dow surging 13% and the
S&P 500 climbing 10% -- but remain down more than 20% in
After a furious three-day rally earlier in the week, stocks
pulled back Friday. The blue-chip index fell 915.39 points, or
4.1%, to 21636.78. The S&P 500 dropped 3.4%, and the Nasdaq
Composite declined 3.8%.
Investors looking for government spending measures to soften the
economic damage watched throughout the week as legislators agreed
to and passed a $2 trillion stimulus package. The legislation,
which President Trump signed Friday, is the largest economic-relief
package in U.S. 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 record high.
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.
"The one-two punch is important," said Mike Wilson, chief U.S.
equity strategist and chief investment officer for Morgan Stanley.
"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
Despite the week's gains for stocks, there were signs that
investors remain cautious. Gold, a traditional haven, posted its
largest one-week percentage gain since September 2008. The yield on
the benchmark 10-year U.S. Treasury fell for a second consecutive
week, dropping 0.188 percentage points to 0.744%.
The Cboe Volatility Index, a closely watched measure of
turbulence in U.S. stocks, finished the week lower after rising for
five consecutive weeks, its longest such streak since December
2012. Many investors expect the recent market volatility to
"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."
The U.S. overtook China this week as the country with the most
coronavirus cases. As of Friday, the U.S. had more than 97,000
confirmed cases, according to data from Johns Hopkins University.
Hospitals in the New York metro area and Seattle have been
overwhelmed despite stringent measures to curtail the
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."
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."
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 for a fifth
consecutive week, losing 4.9% for the week to $21.51 a barrel.
Overseas, the Stoxx Europe 600 index rose 6.1% for the week,
snapping a five-week losing streak. Japan's Nikkei 225 climbed 17%
for the week.
Write to Karen Langley at email@example.com, Avantika
Chilkoti at Avantika.Chilkoti@wsj.com and Chong Koh Ping at
(END) Dow Jones Newswires
March 27, 2020 17:41 ET (21:41 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.