Wall Street surged on Thursday as record weekly jobless claims came in below investors’ worst fears, making a case for more aggressive stimulus to aid businesses and families wrecked by the economic fallout of the coronavirus pandemic.
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, but was still below estimates ranging as high as 4 million.
“This is the first alarming data print, but the whisper number was probably higher than that so it does seem like there’s a little bit of relief in the market,” said Shawn Snyder, head of investment strategy at Citi Personal Wealth Management in New York.
A reassurance from Federal Reserve Chair Jerome Powell to act “aggressively” to shore up credit in the market on top of unprecedented policy easing announced on Monday also added to investor optimism.
“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?”
Expectations are high for the U.S. House of Representatives to pass a $2 trillion stimulus bill to support distressed industries, including airlines, after the Senate cleared the proposal.
The S&P 500 has now clawed back nearly $3 trillion in market value since its close on Monday and is on pace for its third straight daily increase for the first time since the selloff began in late February.
But 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, analysts expect more wild swings in markets.
The CBOE volatility index fell 5 points on Thursday, but was still near levels far above those in 2018 and 2019.
United Airlines, American Airlines and Delta rose between 4.5% and 10%, while Boeing rose 15% to build on a strong rally this week, boosted by a $58 billion provision for the aerospace industry in the latest aid bill.
At 1 p.m. ET, the Dow Jones Industrial Average was up 1,164.45 points, or 5.49%, at 22,365.00, the S&P 500 was up 117.13 points, or 4.73%, at 2,592.69 and the Nasdaq Composite was up 292.52 points, or 3.96%, at 7,676.82.
All the 11 major S&P sectors was trading higher.
Advancing issues outnumbered decliners by more than 8-to-1 on the NYSE and 5-to-1 on the Nasdaq.
The S&P index recorded no new 52-week high or low, while the Nasdaq recorded two new highs and 10 new lows.
A Wall Street rally powered global gains in stocks.
The Dow Jones Industrial Average rose 1,115.19 points, or 5.26%, to 22,315.74, the S&P 500 gained 118.5 points, or 4.79%, to 2,594.06 and the Nasdaq Composite added 303.84 points, or 4.11%, to 7,688.13.
The pan-European STOXX 600 index rose 0.66% and MSCI’s gauge of stocks across the globe gained 3.56%.
Global markets have lost about a quarter of their value in the last six weeks of virus-driven selling.
While markets have found a measure of sustenance as governments and central banks launch unprecedented support measures, investors have struggled to work out how bad the coronavirus impact would be.
“No-one is sure how long things are going to be locked down for, how wide the virus will spread in the U.S., what the death toll and hit on the economy will look like,” said Salman Baig, portfolio manager at Unigestion.
The combination of the massive jobless claims and stimulus dragged the dollar lower.
The dollar index fell 1.222%, with the euro up 1.19% to $1.101.
The Japanese yen strengthened 1.52% versus the greenback at 109.57 per dollar, while Sterling was last trading at $1.2075, up 1.60% on the day.
“Although the latest Fed measures have helped calm markets, as long as the COVID-19 crisis continues and the world economy is effectively in lockdown, we would expect markets to remain in turmoil,” foreign exchange analysts at Bank of America said in a report on Thursday.
The softer greenback buoyed emerging market currencies, with MSCI’s index touching a one-week high.
Oil fell as fears of plunging demand outweighed expectations of support from the U.S. stimulus.
U.S. crude recently fell 4.08% to $23.49 per barrel and Brent was recently at $27.16, down 0.84% on the day.
Prices on U.S. Treasury bonds rose but yields traded relatively tightly and within the week’s range, suggesting the market had already priced in expectations for abysmal data.
Benchmark 10-year notes last rose 14/32 in price to yield 0.8128%, from 0.856% late on Wednesday. The 30-year bond last rose 43/32 in price to yield 1.37%, from 1.421% late on Wednesday.