NEW YORK – Stock markets closed on Thursday with gains for the third day in a row after the Senate passed a massive economic aid package against the coronavirus and Wall Street downplayed a report on historically high unemployment.
The S&P 500 rose 6.2% and accumulates gains of 17.6% in three days. For its part, the rise of the Dow Jones index has been even more remarkable, of 21.3% since Monday.
Nearly 3.3 million Americans applied for government unemployment support last week, easily surpassing the previous record set in 1982, as a wave of layoffs and business closures swept across the country.
The market gained traction as Wall Street anticipated bad news about unemployment, analysts said, and the Senate finally approved a $ 2.2 trillion economic aid package, part of a surprising endorsement of the economy by politicians and the Federal Reserve.
“There is no way to sugarcoat these figures. They are bad, ”said Jamie Cox, partner at Harris Financial Group. “The markets have had several days to digest what we all knew would come; therefore, the market response to these figures could differ from what people might expect ”.
Despite strong gains, the S&P 500 remains 22% below its February high and analysts anticipate bad news and market turmoil in the coming days.
The companies are also expected to post disappointing results in a few weeks, when the quarterly revenue reporting season kicks off. Very few have dared to give forecasts that capture the scale of the impact on their earnings from the virus.
The rise in markets began Tuesday amid expectations that Congress would pass the huge bailout plan, which includes direct payments to families and aid for the worst-hit industries. The House of Representatives is expected to pass it on Friday.
The prospect of a huge financial injection to businesses and families helped offset some of the concerns about the immense job loss that the economy is beginning to see due to the coronavirus.
The Dow Jones rose 1,351 points, or 6.4%, to 22,552.17, while the Nasdaq gained 413.24 integers, or 5.6%, and closed at 7,797.54. The S&P 500 advanced 154.51 units to 2,630.07.
These are the dates that taxpayers would receive the expected checks.
Investors still need to see stability in banks and especially in oil prices to maintain confidence, as markets could suffer a further decline in case crude falls below $ 20 a barrel, said Andrew Slimmon, Account Director at Morgan Stanley Investment Management.
Benchmark US crude lost 7.7% and closed at $ 22.60 a barrel. Goldman Sachs has forecast that it will fall below $ 20 in the next two months as reserves will be at full capacity and wells will need to close.
The yield on 10-year Treasuries fell to 0.83% from 0.85% on Wednesday.