Cautious optimism on Wall Street

Markets rise, reflecting investors’ hope aid will cushion economy.

— 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%.

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 swaths 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 launched an expanded program to buy up to 750 billion euros ($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 high-quality 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.

The price of U.S. crude oil notched its biggest one-day jump on record Thursday, climbing nearly 24%. With the gain, oil recouped nearly all its losses from the day before.