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S&P 500 Posts Best Weekly Gain Since 1974 on Latest Fed Rescue Program

S&P 500 Posts Best Weekly Gain Since 1974 on Latest Fed Rescue Program
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Thursday, 09 April 2020 05:05 PM

Wall Street closed out its best week in 45 years on Thursday after the Federal Reserve launched its latest titanic effort to support the economy through the coronavirus outbreak.

The benchmark S&P 500 index posted it best weekly gain since 1974, in a holiday-shortened week, bolstered by early signs that the outbreak was hitting a peak as well as aggressive global stimulus.

Under the Fed's $2.3 trillion package, the U.S. central bank said it would work with banks to offer four-year loans to companies of up to 10,000 employees and directly buy bonds of states and more populous counties and cities.

"Buying junk bonds, oh my god, pretty much unexpected, so a very strong open, and all the beaten-up names, including energy, they took off," said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.

The financial index was up 5.19%, providing the biggest boost to the S&P 500, as banks rose sharply on the Fed's backstop. J.P. Morgan rose 8.97%, leading gains on the Dow. Shares of the iBoxx High Yield Corporate Bond Fund climbed 6.55%.

That helped take the sting out of another tough report on the labor market, with weekly initial jobless claims topping the 6 million mark for a second straight week.

"Everyone is expecting really lousy earnings and really lousy economic data. It is all going to be focused on when does the rebound happen and what parts of the economy comes back the quickest," said Ghriskey.

The defensive real estate and utilities sectors rose more than 4%.

The Dow Jones Industrial Average rose 285.80 points, or 1.22%, to 23,719.37, the S&P 500 gained 39.84 points, or 1.45%, to 2,789.82 and the Nasdaq Composite added 62.67 points, or 0.77%, to 8,153.58.

For the week, the S&P 500 surged 12.1%. That was its biggest one-week gain since 1974, when it rallied more than 14%. The Nasdaq had its best week since 2009, jumping 10.6%. The Dow soared more than 12% for one of its biggest weekly gains on record.

The U.S. stock market will be closed Friday due to Good Friday.

While public health experts stressed the need to keep people apart to contain the contagion, the restrictions have strangled the economy and sparked widespread production cuts, layoffs and projections of a severe recession.

In a sign that the disease's curve was flattening in New York, the epicenter of the U.S. outbreak, Governor Andrew Cuomo said new hospitalizations fell to a fresh low of 200 for the criis, although deaths spiked to another new high.

The three major indexes, however, finished well off their earlier highs as oil prices reversed course and turned lower as production cuts by OPEC and its allies were seen as not enough to offset the lack of demand. The energy sector fell 1.08%.

Walt Disney Co jumped 3.39%, as the company said its Disney+ streaming service had attracted more than 50 million paid users globally.

Advancing issues outnumbered declining ones on the NYSE by a 6.05-to-1 ratio; on Nasdaq, a 3.54-to-1 ratio favored advancers.

The S&P 500 posted six new 52-week highs and no new lows; the Nasdaq Composite recorded 14 new highs and 11 new lows.

Volume on U.S. exchanges was 11.52 billion shares, compared to the 15.1 billion average for the full session over the last 20 trading days. 

GLOBAL MARKETS

Global equity benchmarks moved higher following signs of some success by governments and central banks which have taken additional steps to bolster their economies during the COVID-19 pandemic, while oil prices pulled back from an earlier surge.

Oil prices ended the day in negative territory after an earlier surge as OPEC and its allies hammered out an agreement to cut output that was smaller than the market was expecting.

MSCI's gauge of stocks across the globe gained 1.58%.

Gains in the United States were bolstered after the Federal Reserve announced a $2.3 trillion effort to support local governments and small to medium-sized businesses. The U.S. central bank said it would begin buying municipal bonds issued by state and local governments in order to help them respond to the health crisis.

"Sentiment remains volatile, but investors appear to be looking through the growing headline numbers of COVID-19 cases and focusing on signs that the spread of the pandemic is being brought under control, which in turn is underpinning hopes for a relatively swift relaxation of containment measures," said Mark Haefele, chief investment officer at UBS Global Wealth Management.

On Thursday, New York Governor Andrew Cuomo said the state's efforts at social distancing were working in getting the virus under control in the epicenter of the U.S. outbreak.

New cases in hospitals fell to a low of 200 in a sign that the disease's curve was flattening in the state. But New York state also recorded a record-high 799 deaths on Wednesday, for a total of 7,067.

"You can’t relax. The flattening of the curve last night happened because of what we did yesterday," Cuomo said.

Members of U.S. President Donald Trump’s economic team have been bullish on re-opening of the economy.

Asked on CNBC on Thursday whether he believed the U.S. economy could be reopened as soon as next month, Treasury Secretary Steven Mnuchin said, “I do.” As soon as Trump “feels comfortable with the medical issues,” he said.

The euro gained against the dollar on hopes euro zone finance ministers would agree on more support for their coronavirus-hit economies.

Yet concerns about the toll of the slowdown measures on the global economy kept a lid on a broad move into riskier assets after U.S. jobless claims data exceeded 6 million for the second straight week, according to data released on Thursday.

Benchmark 10-year notes last rose 15/32 in price to yield 0.7175%, from 0.764% late on Wednesday.

"We're probably on pace to lose more jobs in April alone than we lost during the entire Great Recession," said Dante DeAntonio, senior economist at Moody's Analytics in New York.

The Organization of the Petroleum Exporting Countries and its allies, including Russia - a group known as OPEC+ - held talks on Thursday on record oil output curbs of about 15 million barrels per day (bpd) or more, roughly 15% of global supplies, to support prices hammered by the coronavirus crisis, sources involved in the discussions said.

They said the plan included cuts of about 5 million bpd from producers outside the group known as OPEC+ and could be made gradually.

U.S. crude dropped 7.4% to $23.22 a barrel. Brent crude fell 3% to $31.85 per barrel.

© 2020 Thomson/Reuters. All rights reserved.


   
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Wall Street closed out its best week since 1974 after the Federal Reserve launched its latest titanic effort to support the economy through the coronavirus outbreak.
stock, market, wall street, dow, virus
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2020-05-09
Thursday, 09 April 2020 05:05 PM
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