A dismal unemployment report failed to pop Wall Street’s buoyant mood on Thursday, with stocks running to their third straight day of gains following the federal government’s pledge to shower trillions of dollars on U.S. citizens and commerce.
The Dow Jones industrial average advanced more than 1,300 points, more than 6.2%, Thursday, capping its third straight day of gains. The Dow is on track for a 20% comeback since Monday, and one of its best weeks in history.
The blue chip rally has been powered by aerospace giant Boeing, which has seen a resurrection of its stock price this week on word that federal aid is on the way. Boeing shares were up 13% Thursday afternoon, trading at nearly $180 per share. The stock price was below $100 on Monday.
The Standard & Poor’s 500 index was up 6.1%. The broad index is up more than 15% since Monday, its best three-day run since 1933. The Nasdaq composite jumped 5.6%.
“It’s proof that greed isn’t dead, and neither is optimism” said Michael Farr, president of Farr, Miller & Washington, an investment management firm. “Investors are anxious to have the worst behind us, but with 3 million unemployed and the number likely to go higher, it’s premature to say this market has made its lows.”
The coronavirus bill the Senate passed Wednesday night is the largest economic intervention in U.S. history. It will provide checks to more than 150 million American households, launch massive loan programs for businesses, and direct spending to unemployment insurance programs, hospitals, localities and more.
The relief cannot come soon enough for those who have already lost jobs, shuttered businesses and face daunting months ahead. A record 3.3 million Americans applied for unemployment benefits last week, the Labor Department said Thursday.
“The stock market sold off in advance of this shock to the economy – and this jobless claims number validates the fear that drove that selloff – but the market has since rallied on the assumption that a stimulus bill will be passed,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance in a commentary Thursday. “Unfortunately the public health crisis still remains a big problem and we need to get ventilators to the hospitals that need them most.”
The expectation of a breakthrough in the Senate and the scope of the Federal Reserve’s unprecedented intervention had already propelled markets to first back-to-back stock gains in more than a month. On Wednesday, the Dow Jones industrial average climbed 495.64 points, or 2.4%, to close at 21,200.55. That extended Tuesday’s massive rally that lifted the Dow 11.4% to its best finish in 87 years. The Dow’s two-day haul topped 14%, though it’s still 26% in the hole for 2020 and on track for its worst month since the October 1987 crash.
Yet the pandemic, at once an economic nightmare and public health crisis, continues to wreak havoc worldwide. In an interview Thursday morning with NBC’s “Today” show, Fed Chair Jerome Powell said the country “may well be in a recession” already.
“This $2 trillion stimulus package is just round one,” said Chris Brightman, chief investment officer at Research Affiliates, which has more than $130 billion under management. “Debt and deficits will be mind boggling, not just here but around the world. It’s too soon to worry about inflation, but that coming complication can’t be put off forever. Expect extreme market volatility to continue.”
European markets closed were up across the board. Britain’s FTSE 100 jumped 2.24%, and the German DAX rose 1.3% on the day. The benchmark Stoxx 600 index, Europe’s version of the S&P 500, closed up 2.55%.
The story was different in Asia, where markets posted some of their steepest losses of the past few days. Japan’s Nikkei 225 plummeted 4.51%, and Hong Kong’s Hang Seng dropped 0.7%. The Shanghai composite fell 0.6%.
In his “Today” interview, Powell emphasized that the U.S. economy wasn’t facing a typical downturn as the outbreak pushes people to shutter businesses and withdraw from normal activity. But once the virus is contained and consumer confidence returns, Powell said, “There can also be a good rebound on the other side.”
Until then, the Fed will continue to step in “aggressively and forthrightly, as we have been.”
“When it comes to this lending, we’re not going to run out of ammunition,” Powell said. “That’s not going to happen.”