NEW YORK – Stocks marched higher on Wall Street Thursday, putting the market on track for its first three-day rally in six weeks, even as the astonishing scale of the downturn slamming the economy because of the coronavirus becomes more apparent.
Nearly 3.3 million Americans applied for unemployment benefits last week, easily shattering the prior record set in 1982, as layoffs and business shutdowns sweep across the country. The outbreak has happened so suddenly that Thursday’s jobless report is one of the first points of data showing how much economic pain it’s creating.
The S&P 500 was up 4.2%, continuing a rally that has vaulted the index 15.2% higher since Monday on rising expectations that Congress will soon approve an unprecedented rescue package for the economy. Both Capitol Hill and the Federal Reserve are promising an astonishing amount of aid for the economy and markets, hoping to support them as the outbreak causes more businesses to shut down by the day.
Late Wednesday, the Senate unanimously approved the $2.2 trillion plan, which includes direct payments to U.S. households and aid to hard-hit industries. The House of Representatives is expected to approve it Friday.
Futures for stocks and yields cut their losses immediately after the jobless claims report was released in the morning, which was before U.S. stock trading opened. Most traders likely expected an extreme number from the jobless report, analysts said.
“There is no sugar coating these numbers—they are bad,” said Jamie Cox, managing partner for Harris Financial Group. “Markets have had several days to digest what everyone knew was coming; therefore, the market response to these numbers may differ than what people might expect.”
Investors still need to see stability in banks and, especially, in oil prices to maintain confidence, because markets could be in for another slide if oil goes below $20 a barrel, said Andrew Slimmon, managing director and senior portfolio manager at Morgan Stanley Investment Management.
The price of U.S. oil slid 8% to $22.53 in afternoon trading. Goldman Sachs has forecast that it will fall well below $20 a barrel in the next two months because storage will be filled to the brim and wells will have to be shut in.
“I wouldn’t necessarily say that where the market was yesterday we won’t see that again,” Slimmon said. “There is bad news still to come.”
Investors say the market need three main things to slow its breathtaking drop, which has sliced one quarter off the S&P 500 since it set its record last month.
The first is already here after the Federal Reserve has slashed interest rates back to nearly zero and offered to buy an unlimited amount of Treasurys to get lending markets running more smoothly. The second is making progress, as the economic rescue plan moves through Capitol HIll.
The third, though, is getting more concerning by the day: the accelerating spread of the virus.
The United States has more than 69,000 known cases, and the worldwide number of infections has topped 487,000, according to Johns Hopkins University. The death toll has surpassed 22,000, while more than 117,000 have recovered.
For most people, the new coronavirus causes mild or moderate symptoms, such as fever and cough that clear up in two to three weeks. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia and death
The yield on the 10-year Treasury fell to 0.79% from 0.85% late Wednesday. It had been as low as 0.77% just before the jobless report was released. Lower yields reflect dimmer expectations for economic growth and greater demand for low-risk assets.
Airlines, cruise operators and hotels beaten down as the outbreak led to suspended travel plans by businesses and vacationers were helping drive the rally. Investors are anticipating the economic rescue package will help prop up the hard-hit industries.
American Airlines was up 3.8%, while Delta Air Lines rose 6.8%. Marriott International gained 3.2% and casino operator Las Vegas Sands rose 1.4%.
Carnival jumped 15.8% and Royal Caribbean vaulted nearly 11%. Shares in the cruise operators are still down more than 60% this year.
Boeing continued to climb after soaring more than 24% Wednesday in part on expectations that it stands to gain from the Congressional aid package. The aircraft manufacturer was the biggest gainer in the Dow Jones Industrial Average, rising up 13%.
The Dow was also adding to its gains this week. It was up about 4.5% after climbing more than 950 points. The Nasdaq was up 3.4%.
European markets were also broadly higher following a mixed finish for Asian markets.
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