New York.- Wall Street closed this Wednesday with solid advances in its three main indicators, which in the case of the Dow Jones of industrialists was 2.21%, in a day marked by hopeful advances in coronavirus research.
The good session on Wednesday means that the S&P could mark its best month since 1974, since at the moment, since April 1, it has accumulated a rise of more than 13%. For its part, the Dow is also on track to record the best month since 1987, having advanced 12.4% so far in April.
At the end of the operations on the New York Stock Exchange, the Dow Jones rose, boosted by large financial companies such as American Express (8.95%) or Visa (6.18%) and the energy sector, led by Exxon Mobil (5.51%) and Chevron ( 5.25%). The selective S&P 500 climbed 2.66% and the Nasdaq market composite index, which brings together the main technology companies, advanced 3.57%.
The price of intermediate oil from Texas (WTI) rebounded 22.04% higher and closed this Wednesday at 15.06 dollars a barrel, on a day marked by investors’ confidence that world economies will reopen earlier than expected after the scourge of the coronavirus pandemic, as well as a lower-than-expected build-up in US inventories.
Oil prices thus rose more than 22% on Wednesday after data showed a lower-than-expected build-up in US inventories, as well as investors’ hope that economies will reopen earlier than expected.
Optimism that economies will be able to reopen earlier than scheduled rose after Gilead said early results from its coronavirus drug trial showed that at least 50% of patients treated with one dose for five days got better and more. half were discharged from the hospital within two weeks.
All this despite a 4.8% decline in GDP in the United States in the first quarter, the largest economic contraction in the country since the financial crisis.
Federal Reserve asks Congress for more fiscal help amid “unprecedented” crisis
At noon, the president of the Federal Reserve (Fed), Jerome Powell, announced on Wednesday that economic activity in the United States “will fall at an unprecedented rate” in the second quarter of 2020, warning of the “seriousness” of the crisis unleashed by the coronavirus pandemic.
“It is clear that the effects on the economy are serious … Economic activity will probably fall at an unprecedented rate in the second quarter of the year,” Powell explained at a press conference after the monetary meeting in which he left without interest rate changes in the range between 0.25% and 0%.
In his appearance, he stressed the willingness of the Fed “to use all the tools available to support the United States economy in these challenging times.” The Fed has launched its entire monetary arsenal with massive and unlimited purchases of bonds and assets, as well as various injections of liquidity, to keep the financial system operational amid growing tensions from the coronavirus.
So far, these measures exceed $ 3 trillion, but Powell insisted on his intention to continue supporting the economy where possible. However, he sent a message about the limits of monetary policy and the need for Congress to increase the fiscal stimulus launched so far.
“I want to emphasize that the powers of the Fed are lending, they are not spending powers. Getting a loan that may be difficult to pay may not be the solution … direct fiscal support may be necessary,” he added. For this reason, he warned that “the severity of the recession will depend on the political actions taken at all levels of Government.”
The words of the president of the Fed come hours after the first calculation of the evolution of the gross domestic product (GDP) between January and March was released.
The US economy contracted at an annual rate of 4.8% in the first quarter of 2020 due to the effects of the coronavirus pandemic, the largest drop since the last quarter of 2008, with the outbreak of the financial crisis that caused the Great Recession, in which the economy slowed at an annual rate of 8.4%.
“Low interest rates are likely to persist for at least the next two years, long after the immediate threat of the virus has dissipated,” Lauren Goodwin, an economist at investment fund New York Life Investments, said in a note to clients.
The United States, which already registers a million cases of cases and almost 60,000 deaths, is preparing for a recession not seen since the 1930s due to the paralysis of economic activity due to the pandemic. In recent weeks, more than 26 million people have applied for unemployment benefits in the country.
For now, the US Congress has already approved four economic rescue packages worth nearly $ 3 trillion additional, including direct cash transfers to citizens and subsidies to small and medium-sized businesses.
“We are putting an unprecedented amount of fiscal aid into the economy. There are going to be trillions of dollars in the economy and I think this is going to have a significant impact,” Treasury Secretary Steven Mnuchin said Sunday.
However, Republican leaders, with a majority in the Senate, have expressed their reluctance to support struggling state and economic authorities to avoid fattening the country’s already bloated debt. The next meeting of the Fed will take place on June 9 and 10, in which it will present its new macroeconomic projections.