Reuters / John Gress
- US stocks gained Thursday as investors shrugged off a huge number of weekly jobless claims spurred by layoffs related to the coronavirus outbreak.
- The Dow Jones industrial average surged 6.4% — or 1,352 points — to extend its three-day surge to 21%. That means the index has officially reentered a bull market just weeks after the last one ended.
- Investor optimism continued to build around the $2 trillion coronavirus stimulus package the Senate passed late Wednesday.
- The bill includes unemployment-benefit expansions, help for businesses, and payments for Americans to help bolster the US economy amid the fallout from the pandemic.
- Read more on Business Insider.
US stocks rose on Thursday, notching the first three-day rally since February, after the Senate passed a $2 trillion coronavirus stimulus package.
The Dow Jones industrial average surged 6.2% — or 1,352 points — to extend its three-day surge to 21%. That means the index has officially reentered a bull market just weeks after the last one ended.
Optimism around the package offset a dismal US weekly jobless-claims report showing that a record 3.3 million Americans filed for unemployment benefits in the week ending March 21. That figure exceeded economists’ expectations and provided a jarring sign of just how big of an effect the coronavirus pandemic will have on the US economy.
Here’s where the major US indexes stood at the market close on Thursday:
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“I am shocked that the markets, for whatever reason, rallied on that,” Randy Frederick, vice president of Trading and Derivatives at the Schwab Center for Financial Research, told Business Insider in an interview.
He continued: “We have been in the last couple of days in an environment where we’ve seen the market go up on bad news and volatility come down. That is a potential sign of a bottoming process.”
Even though economists across Wall Street were braced for a huge spike in jobless claims, “the information is worrying,” Seema Shah, the chief strategist at Principal Global Investors, told Business Insider in an email.
“The further unemployment rises, the deeper the economic downturn will be and the longer it will last as productive capacity is eroded,” she said.
Now investors will be carefully watching policymakers as the $2 trillion stimulus package makes its way to the House for a vote. The bill, called the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was passed by the Senate late Wednesday night in a unanimous 96-0 vote. It includes expanded unemployment benefits, loans for struggling businesses, and payments for millions of Americans.
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Stocks surged to intraday highs in the afternoon following House Speaker Nancy Pelosi’s comments that the bill will be passed soon with strong bipartisan support. She also said looking ahead to a fourth bill and that there could be more direct payments to Americans in the future.
It marks the latest effort to bolster the US economy from fallout as much of the country goes into lockdown to curb the spread of the disease. In addition, the Federal Reserve has in recent weeks unleashed its toolkit to boost the economy, including slashing interest rates near zero and launching unlimited bond-buying.
But there is some concern that the stimulus package could fall short of expectations and that more aid may be required to keep the US economy afloat as the number of cases of COVID-19, the illness caused by the coronavirus, continues to climb. There are more than 500,000 COVID-19 cases around the world, and 22,000 people have died.
“The most critical factor in this crisis is still when the peak in infections becomes evident and the pandemic ends,”said Hussein Sayed, the chief market strategist at FXTM. “Until we get a clear assessment of the damage to the economy and earnings, it’s difficult to make rational investment decisions.”
While the Dow is back in a bull market already, the S&P 500 and Nasdaq are within a few percentage points of reentering their own. A bull market is typically defined as a 20% trough-to-peak increase for an index.
A bear market turning back into a bull one “has never happened that quickly,” Frederick said. “If it does indeed end with this rally that we’re seeing right now, it will absolutely be the shortest bear market in history.”
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