U.S. Stocks Rise on Fed Action, Oil Rally
April 09 2020 - 2:03PM
Dow Jones News
By Caitlin Ostroff, Akane Otani and Chong Koh Ping
U.S. stocks soared Thursday ahead of the Easter holiday weekend,
heading for their biggest one-week rally of the year.
The Dow Jones Industrial Average jumped 521 points, or 2.2%, to
23955. The S&P 500 added 2.3% and the Nasdaq Composite advanced
1.3%.
Markets have charged higher much of the past week, helping
shares of everything from banks to manufacturers to hotel operators
chip away at their losses.
The frenzied rally has stood in sharp contrast to increasingly
dim news on the health of the economy.
Data Thursday showed the number of Americans who applied for
unemployment benefits in the first week of April was 6.6 million,
as swaths of the U.S. economy shut down because of the coronavirus
pandemic. In a report, the Congressional Budget Office said it
expected U.S. unemployment to fall by more than 10% in the second
quarter, despite lawmakers recently enacting stimulus measures to
try to offset the pain stemming from a nationwide disruption to
business.
"There's a lot of uncertainty at the moment," said Andrew
Hunter, a senior U.S. economist at Capital Economics. "Everyone's
been surprised at the speed and scale of the layoffs."
One reason analysts have said stocks have proved to be more
resilient than expected: central bankers have stepped in to provide
unprecedented levels of support for the economy. The Federal
Reserve unveiled new programs Thursday to provide $2.3 trillion in
lending, expanding efforts to reach small and midsize businesses,
as well as cities and states. The central bank also said it would
expand its corporate lending programs to riskier types of debt that
had previously been excluded.
Others believe the economy will rebound in the second half of
the year, given authorities' containment measures prove effective
in stemming the spread of coronavirus. Nearly 85% of the economists
in a Wall Street Journal survey predicted annualized growth rates
of 6.2% in the third quarter, followed by 6.6% in the fourth
quarter.
In the stock market, some of the sectors that have been hit
hardest in the past month were among the biggest gainers.
Banks rallied, with JPMorgan Chase up 10% Thursday and Goldman
Sachs Group up 4.9%. Energy shares also climbed, with Exxon Mobil
rising 2.8%.
Meanwhile, the number of coronavirus infections passed 432,000
in the U.S., with fatalities climbing above 14,800. Countries
around the world including Japan and Singapore reported a record
number of new cases, prompting discussions about extending the
lockdown measures.
The Stoxx Europe 600 finished the week up 7.4% for its best
showing since 2011, while in the Asia-Pacific region, Australia's
stock benchmark closed the week 6.3% higher.
Chinese and South Korean equity benchmarks ended the day higher,
while Japan's Nikkei 225 was flat.
"Investors are not putting the risk of a resurgence on the top
of their minds right now," said Eli Lee, head of investment
strategy at Bank of Singapore. The risk of a second or subsequent
wave of infections would bear watching as this could prolong
containment measures, leading to a longer recession than expected,
he cautioned.
On Friday, many of the world's major stock markets, including
the U.S., will be closed Friday for public holidays. Markets in
South Korea, mainland China and Japan will remain open for
trading.
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com, Akane Otani
at akane.otani@wsj.com and Chong Koh Ping at
chong.kohping@wsj.com
(END) Dow Jones Newswires
April 09, 2020 13:48 ET (17:48 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.