Stocks jumped on Thursday after the Federal Reserve gave more details on how it will support the economy amid the coronavirus pandemic.
The Dow Jones Industrial Average jumped 329 points, or 1.4%. The S&P 500 gained 1.4% while the Nasdaq Composite advanced 0.4%. Thursday’s gains put the major averages on pace for strong weekly gains. The U.S. stock market will be closed Friday due to Good Friday.
Stocks came off their highs after Democrats in Congress blocked a Republican effort for unanimous support for $250 billion in small-business aid.
The Fed announced as slew of programs, including loans geared towards small and medium sized businesses, that will total up to $2.3 trillion. The central bank also gave more details on its plans to buy investment-grade and junk bonds.
“This Fed is the most aggressive Fed. They do not want to be known as the reason why we went into a depression,” CNBC’s Jim Cramer said on “Squawk Box” on Thursday. “I’m very impressed. The Fed is on its game and this is what is needed because we got to fight off a depression, we got to get America open for business.”
Thursday’s announcement was enough to outweigh another massive jump in weekly jobless claims. More than 6 million Americans filed for unemployment benefits last week. Economists expected an increase of 5 million. The latest data built on the record-shattering prior two readings of 6.6 million and 3.3 million.
Major weekly gains
The Dow was up more than 12.9% for the week after Thursday’s open, putting the 30-stock average on pace for its biggest weekly gain since 1938. The S&P 500 was up 12.1% week to date, on pace for its best week since 2008. The Nasdaq had gained 10.9% and was headed for its best weekly performance since 2008.
Wall Street’s weekly surge comes amid increasing hope that the situation around the coronavirus was improving. In recent days, the number of new daily confirmed cases has dropped globally and in the U.S. New York state has also reported a decline in its virus-related hospitalization rate.
Treasury Secretary Steven Mnuchin also told CNBC on Thursday the U.S. economy could be re-opened in May. But some believe that stocks are now getting ahead of themselves and investors should exercise caution.
“I think this is kind of buy the rumor and potentially we sell the news when reality sets in of what we are going to see what’s on the other side,” billionaire investor Mark Cuban said Wednesday on CNBC’s “Closing Bell.”
“I think people are naturally optimistic right now in terms of the market. I just don’t think they’re really factoring in what we’re going to see on the other side,” he added.
After Thursday’s rally, the Dow is up more than 30% from its March low and the Nasdaq is down 9% this year.
“The stock market is at a very uncertain point now. The impact of the coronavirus on future earnings is yet to be determined. We aren’t out of the woods,” said Nancy Davis, chief investment officer at Quadratic Capital.
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