Stocks’ swings end up in gains
Virus-aid hopes bolster investors
NEW YORK — Stocks capped a wobbly day on Wall Street with solid gains Thursday, reflecting cautious optimism among investors that emergency action by the U.S. government and central banks will cushion the global economy from a looming recession caused by the coronavirus pandemic.
The swings in the market were markedly less volatile than recent days. The Dow Jones Industrial Average gained almost 200 points, or 0.9%. The S&P 500 rose 0.5% after bouncing between a gain of 2.9% and a loss of 3.3% early. That would be a notable change in normal times, but the index has had eight straight days where it bounced up or down between 4.9% and 12%.
In another sign that shellshocked investors were becoming a little more willing to hold riskier assets, stocks of smaller companies rose far more than the rest of the market. Those stocks had taken some of the heaviest losses since the sell-off began in early March.
The S&P 500 index rose 11.29 points, closing at
2,409.39, while the Dow rose 188.27 points to 20,087.19. The Nasdaq, which is dominated by tech giants such as Apple, rose 160.73 points, or 2.3%, to 7,150.58; the Russell 2000 index of smaller company stocks rose 67.58 points, or 6.8%, to 1,058.75.
The S&P 500, which drives movements for most 401(k) accounts more than other indexes, is down roughly 29% since its record exactly a month ago and close to its lowest point since late 2018.
Markets have been so volatile because investors are weighing the increasing likelihood of a recession on one hand against huge, emergency efforts to prop up the economy on the other. Markets got more of each on Thursday.
The number of Americans filing for unemployment benefits jumped by 70,000 last week, more than economists expected, in one of the first signs of layoffs sweeping across the country. Wide areas of the economy are grinding closer to a standstill, from the travel industry to restaurants, as authorities ask Americans to stay home to slow the spread of the virus. Another weak manufacturing report, this time in the mid-Atlantic region, added to the worries.
But the world’s largest central banks announced their latest efforts to support financial markets and the economy. The European Central Bank debuted an expanded program to buy up to $820 billion in bonds, and the Bank of England cut its key interest rate to a record low of 0.1%.
The Federal Reserve unveiled measures to support money-market funds and the borrowing of dollars as investors in markets worldwide hurry to build up dollars and cash. The dash for cash has strained markets, and sellers of even highquality bonds say they’re having difficulty finding buyers at reasonable prices. Many of the Fed’s moves, which are getting revived after being used in the 2008 financial crisis, are aimed at smoothing out operations in such markets.
“Every day there’s another announcement of what the stimulus is going to look like, but what seems to be apparent is the recognition of some in the administration that funding is going to have to be larger, more significant than initially expected,” said Quincy Krosby, chief market strategist at Prudential Financial.
Investors also appeared encouraged by reports that China is set to ramp up stimulus spending after the province where the virus first emerged showed no new infections on Wednesday.
The price of U.S. crude oil notched its biggest oneday jump on record Thursday, climbing nearly 24%. With the gain, oil recouped nearly all of its losses from the day before. Traders likely bid up oil prices after reports that the U.S. may intervene in an oil price war between Saudi Arabia and Russia that’s helped knock oil prices into a steep skid this month.
Still, the market likely will remain volatile until investors see more economic data that shows just how badly the outbreak is hurting the economy.
“They’re doing what they can, and I’m not sure what else they can do,” said Sal Bruno, chief investment officer at IndexIQ.
Major indexes started the day lower, then rose before and during a late morning news conference led by President Donald Trump to give updates on the outbreak. The gains were mostly gone in early afternoon trading as the indexes turned mixed. The indexes snapped back into the green by midafternoon, however.
European stocks swung from gains to losses and back to gains. Asian markets dropped after the brutal 5.1% loss for U.S. stocks the previous day.
Ultimately, investors say they need to see the number of new virus infections stop accelerating for the market’s extreme volatility to ease.
Until the number of new cases peak, investors will struggle with uncertainty about how much to pay for a stock, bond or commodity when they don’t know how long the economic downturn will last. Many economists expect a sharp drop in the economy, but they disagree on how long it will take to bounce back.
The New York Stock Exchange said late Wednesday that it will temporarily close its trading floor and move to all-electronic trading beginning Monday after two employees tested positive for coronavirus. The exchange has also started medically screening all personnel who enter the building. Much stock trading has gone electronic in recent years, and there are far fewer floor brokers than there used to be.