FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 20, 2020. REUTERS/Lucas Jackson
March 26, 2020
By Noel Randewich
(Reuters) – Wall Street rallied for a third straight session on Thursday as record weekly jobless claims came in below investors’ worst fears and investors focused on an unprecedented $2 trillion stimulus awaiting approval by the U.S. House of Representatives.
The number of Americans filing claims for unemployment benefits surged to 3.28 million last week as state-wide lockdowns brought the economy to a halt and unleashed a wave of layoffs.
The median expectation of analysts polled by Reuters was for 1 million claims, but the top end of the forecast was as high as 4 million.
Expectations are high that the U.S. House of Representatives will pass the stimulus measure to support distressed industries, including airlines, after the Senate cleared the proposal.
It would flood the country with cash in an effort to stem the crushing economic impact of an intensifying pandemic that has killed about 1,000 and infected nearly 70,000 people in the United States.
The benchmark S&P 500 index was on track for three straight day of gains for the first time since mid-February, before coronavirus fears stopped Wall Street’s 11-year bull market. Since Monday, the S&P 500 has surged almost 15%, although it remains down 24% from its Feb. 19 record high.
“It’s encouraging to see people buying a day after a big up day because we hadn’t seen that in a month,” said Randy Frederick, vice president of trading & derivatives at Charles Schwab. “That doesn’t guarantee that the bottom is in, but it is indicative of a bottoming process.”
Delta Air Lines <DAL.O> jumped 5.2%, while Boeing <BA.N> rose 14%, boosted by a $58 billion provision for the aerospace industry in the latest aid bill. Boeing has surged over 90% in the past four sessions.
Adding to upbeat sentiment, Federal Reserve Chair Jerome Powell said the central bank stood ready to act “aggressively” to shore up credit in the market on top of the unprecedented policy easing announced on Monday.
“He said the Fed is not going to run out of ammunition and that the committee still has policy room for more action,” said Charalambos Pissouros, senior market analyst at JFD Group in Cyprus.
“By saying that he raises the question – will they go for negative interest rates?”
With macroeconomic indicators likely to worsen heading into the second quarter as a breakdown in business activity and fears of corporate defaults foreshadow a deep global recession, many analysts expect more wild swings in markets.
The CBOE volatility index <.VIX> fell 4.9 points, but was still near levels far above those in 2018 and 2019.
At 2:44 pm ET, the Dow Jones Industrial Average <.DJI> had jumped 4.82% at 22,222.22 points, while the S&P 500 <.SPX> gained 4.67% to 2,591.13.
The Nasdaq Composite <.IXIC> soared 4.03% to 7,681.73.
The S&P utilities index <.SPLRCU> was the strongest among 11 sectors, jumping 7.2%.
Advancing issues outnumbered declining ones on the NYSE by a 5.15-to-1 ratio; on Nasdaq, a 3.71-to-1 ratio favored advancers.
The S&P 500 posted no new 52-week highs and no new lows; the Nasdaq Composite recorded 4 new highs and 13 new lows.
(Reporting by Noel Randewich, additional reporting by Uday Sampath and Medha Singh in Bengaluru, and Ross Kerber in New York; Editing by Bernadette Baum)
